CRISIL assigns AAA/Stable to State Bank of Mysore perpetual bonds
CRISIL has assigned AAA/Stable rating to State Bank of Mysore’s tier I perpetual bonds of Rs 160 crore. The rating agency has also reaffirmed AAA/Stable on upper tier II bonds of Rs 300 crore and lower tier II bonds aggregating Rs 250 crore.
By INDIATIMES NEWS NETWORK |
MUMBAI - CRISIL has assigned AAA/Stable rating to State Bank of Mysore’s tier I perpetual bonds of Rs 160 crore. The rating agency has also reaffirmed AAA/Stable on upper tier II bonds of Rs 300 crore and lower tier II bonds aggregating Rs 250 crore.
CRISIL expects State Bank of Mysore to continue to benefit from State Bank of India’s parentage. SBI’s support, coupled with State Bank of Mysore’s better-than-average asset quality and adequate capitalisation levels, will offset the impact of constraints of moderate resources, small size and restricted geographical coverage.
The rating on State Bank of Mysore’s tier I perpetual bonds and upper tier II bonds takes into account the unique features of the instrument, including conditional debt servicing. The bank’s current and projected capital adequacy levels, and its ability to raise fresh capital support the rating. The bank benefits from the synergies with SBI in management and technology.
CRISIL believes that strategic importance and majority ownership underscore SBI’s moral obligation and economic rationale to provide support to the bank in the event of distress, if any. State Bank of Mysore’s better than average asset quality is reflected by its gross and net non-performing assets at 2 per cent and 0.34 per cent, respectively, as on September 30.
State Bank of Mysore’s net profitability margin has improved to 1.7 per cent for 2006-07 (April-March) against 1.5 per cent from 2005-06. The better than average profitability is a result of decline in operating expenses by 50 basis points in 2006-07. Additionally, the bank is adequately capitalised with a Tier I capital adequacy ratio of 6.7 per cent and an overall capital adequacy, as a proportion of its risk-weighted assets, of 11.12 per cent as on Sept 30. The bank also had a healthy net worth coverage of net NPAs at 21.1 times as on March 31.
State Bank of Mysore’s assets stood at Rs 29,300 crore as on Sep 30. The bank has a network of 641 branches offering diversified financial services. It reported a profit after tax of Rs 164 crore for the first half year against Rs 110 crore during the corresponding period in the previous year.
CRISIL expects State Bank of Mysore to continue to benefit from State Bank of India’s parentage. SBI’s support, coupled with State Bank of Mysore’s better-than-average asset quality and adequate capitalisation levels, will offset the impact of constraints of moderate resources, small size and restricted geographical coverage.
The rating on State Bank of Mysore’s tier I perpetual bonds and upper tier II bonds takes into account the unique features of the instrument, including conditional debt servicing. The bank’s current and projected capital adequacy levels, and its ability to raise fresh capital support the rating. The bank benefits from the synergies with SBI in management and technology.
CRISIL believes that strategic importance and majority ownership underscore SBI’s moral obligation and economic rationale to provide support to the bank in the event of distress, if any. State Bank of Mysore’s better than average asset quality is reflected by its gross and net non-performing assets at 2 per cent and 0.34 per cent, respectively, as on September 30.
State Bank of Mysore’s net profitability margin has improved to 1.7 per cent for 2006-07 (April-March) against 1.5 per cent from 2005-06. The better than average profitability is a result of decline in operating expenses by 50 basis points in 2006-07. Additionally, the bank is adequately capitalised with a Tier I capital adequacy ratio of 6.7 per cent and an overall capital adequacy, as a proportion of its risk-weighted assets, of 11.12 per cent as on Sept 30. The bank also had a healthy net worth coverage of net NPAs at 21.1 times as on March 31.
State Bank of Mysore’s assets stood at Rs 29,300 crore as on Sep 30. The bank has a network of 641 branches offering diversified financial services. It reported a profit after tax of Rs 164 crore for the first half year against Rs 110 crore during the corresponding period in the previous year.
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