S&P affirms BBB rating on ICICI Bank, stable outlook

Global rating agency S&P has affirmed a BBB rating on the ICICI Bank with a stable outlook on improved asset quality.

This is despite the uneven economic recovery in India and macroeconomic challenges.

In our base case, the bank's weak loans, defined as nonperforming loans NPLs and restructured loans, will decline to 3 -- 3.5 percent of total loans over the next 12 months, from about 4.6 percent as of March 31, 2022, S&P Global Ratings said.

Credit conditions will support this and credit costs should remain at around 1 percent over the next 12 -- 18 months, it said, adding that the bank's asset quality should be better than the Indian sector average and in line with international peers over the next two years.

The bank's better customer profile and underwriting relative to the Indian banking sector will likely limit losses from the spillover impact of geopolitical tensions. Retail loans form about 53 percent of the bank's loan portfolio, it said.

These are well diversified among home loans, vehicle loans, and unsecured loans, including personal loans and credit cards.

The stable outlook shows that ICICI Bank will keep a strong market position in the Indian banking sector, it said.

The bank should have a good capitalization over the next 12 -- 18 months, supported by healthy earnings, it added.

An upgrade of the ICICI Bank is unlikely to happen over the next two years as it requires an improvement in the bank's financial profile as well as the credit rating on India, it said.