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Stock Analysis, IPO, Mutual Funds, Bonds & More

CARE reaffirms RBL’s bond ratings, downgrade LVB’s

In another rating action, Lakshmi Vilas Bank’s bond programme of Rs 318 crore was downgraded to BB+ with negative outlook from BBB-.

ET Bureau|
Updated: Oct 14, 2019, 08.37 AM IST
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The lender has also been put under the RBI’s Prompt Corrective Action (PCA) framework.
Mumbai: Amid collapsing stock prices and doubts about some of the property exposures of RBL Bank, CARE Ratings has reaffirmed the rating of the lender’s Rs 800-crore, tier-2 bond programme at AA- with ‘stable’ outlook, while downgrading Lakshmi Vilas Bank to BB+ from BBB after the latter was brought under regulatory curbs.

“CARE Ratings has reaffirmed the rating of CARE AA- (Stable) for the Basel III Compliant Tier II Bonds programme of RBL Bank for Rs 800 crore,” the agency said in a statement.

The latest rating action took into account the established franchise and demonstrated capital raising ability of the lender, which has helped it maintain comfortable capital adequacy while expanding its advances, adequate profitability, and stable scale-up of business, CARE further said.
rbl-graph

The agency, however, cautioned that the rating was constrained due to the high operating costs on account of branch and franchise expansion, moderation witnessed in the asset quality, unseasoned loan book given the robust growth in the last few years, and relatively low proportion of deposits. Shares of the lender have taken a beating over its exposure to certain stressed companies.

In another rating action, Lakshmi Vilas Bank’s bond programme of Rs 318 crore was downgraded to BB+ with negative outlook from BBB-. The Reserve Bank of India (RBI) recently rejected the plan to merge Indiabulls Housing Finance and Lakshmi Vilas Bank after examining the proposal for more than six months, even as both entities took several initiatives to comply with the strict banking sector takeover rules.

The lender has also been put under the RBI’s Prompt Corrective Action (PCA) framework.
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