Bank of India's Infra & Tier 2 Bonds Affirmed at AA+/Stable by India Ratings
India Ratings reaffirmed Bank of India's Basel-III Tier II and Long Term Infra Bonds at 'AA+'/Stable. Issuer rating and AT1 bond ratings were withdrawn. The rating reflects systemic importance, government support, and improving asset quality and capital position. Deposit mobilization remains a challenge.
The reaffirmation of credit ratings for significant debt instruments like Tier II and Infra Bonds can positively influence investor confidence and the bank's borrowing costs. However, the withdrawal of issuer rating and AT1 bond ratings introduces some complexity.
The reaffirmation of 'AA+' rating with a stable outlook for key debt instruments by India Ratings is a positive development, indicating the rating agency's confidence in the bank's financial health and stability.
Bank of India (BoI) has had its Basel-III compliant Tier II Bonds and Long Term Infra Bonds rating reaffirmed as 'AA+' with a 'Stable' outlook by India Ratings & Research. The rating agency also withdrew the issuer rating and ratings for Basel III Additional Tier 1 bonds. The reaffirmation reflects BoI's systemic importance, government support (73.38% stake), and improving capital position and operating buffers. The bank's asset quality has shown improvement, with gross NPA ratio reducing to 2.26% and net NPA ratio to 0.6% as of 3QFY26. Profitability has also seen an upward trend since FY21. However, the bank's deposit profile continues to face pressure, with low-cost CASA deposits at 32.6% and a rising loan-to-deposit ratio. India Ratings expects BoI's capital buffers to remain adequate for growth, but maintaining loan growth amidst deposit mobilization challenges will be a key monitorable.
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