Axis Bank Cut to Junk By S&P On Forecast For Indian Recession
S&P Global Ratings lowered Axis Bank Ltd.’s credit rating to below investment grade.
(Bloomberg) -- S&P Global Ratings lowered Axis Bank Ltd.’s credit rating to below investment grade on expectations that a looming recession in India, sparked by the coronavirus pandemic, will see more loans on the bank’s books turn sour.
It cut Axis Bank’s rating to BB+ from BBB-, with a stable outlook, according to a statement Friday.
“We believe risks stemming from challenging operating conditions following Covid-19 have increased for Indian banks,” S&P said. “We anticipate Indian banks’ asset quality will deteriorate, credit costs will rise, and profitability will decline over the next 12 months.”
India has recorded almost 500,000 cases of Covid-19, the fourth-biggest outbreak in the world, with no sign that the disease’s spread is slowing down. A stringent lockdown earlier this year failed to suppress the virus in densely populated India, though it did result in a loss of more than a 100 million jobs and put the country on track for its first annual economic contraction in four decades.
The virus will be a headwind for the year started April 1 and provisions will increase materially, Axis Bank’s Chief Executive Officer Amitabh Chaudhry said in April, after reporting a quarterly loss.
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