CARE Ratings Ltd has upgraded the credit rating of South Indian Bank’s Basel III Tier II debt from CARE A+ Stable to CARE AA- Stable. According to the rating agency, the upward revision was based on the improvement in the bank’s risk profile and asset quality among others.
The revision in the long-term ratings assigned to the debt instruments of South Indian Bank factors in improvement in the bank’s financial risk profile and business performance, aided by better asset quality and improving profitability over the past three years.
The bank’s return on total assets (ROTA) for FY25 increased to 1.08 per cent compared to 0.95 per cent for FY24, while its net NPA to net worth ratio improved to 8.10 per cent from 13.38 per cent in the previous year and its net stressed assets to net worth ratio reduced to 12.11 per cent from 22.59 per cent in the previous year.
The bank continues to maintain comfortable capitalisation supported by internal accruals post equity capital infusion in FY24, the agency said in its rating report.
The rating also factors in long track record of operations, established depositor base and diversified advances portfolio. The bank is expected to grow at par with the industry while maintaining adequate capitalisation and witnessing diversification in the advances mix with increase in proportion of retail and MSME advances. Asset quality parameters are expected to remain stable in the near term.
Earlier, India Ratings too upgraded South Indian Bank’s Basel III Tier II debt’s credit rating a notch up to IND A+ Stable to IND AA- Stable.
Published on August 1, 2025