Fitch Ratings has affirmed Axis Bank's long-term issuer default rating at BB-plus with a negative outlook and its viability rating at bb.
The negative outlook mirrors the outlook on India's BBB-minus sovereign rating which was revised to negative from stable in June due to the impact of escalating coronavirus pandemic on the country's economy.
Axis's issuer default rating which is higher than its viability rating is driven by its support rating floor and support rating.
Fitch said the bank has a moderate likelihood of extraordinary state support if required due to its size and systemic importance; 5.6 per cent of banking sector loans and 4.5 per cent of deposits on 1H FY21.
However, it regarded the likelihood of support for Axis to be lower than for large state banks that have support rating floors of BBB-minus due to its private ownership, but to be similar to that of other large private banks.
Nevertheless, Axis is a systemically important bank and the government has a record of supporting such banks, although Axis has not required support in the past. The March rescue of Yes Bank reinforces this view.
Fitch said the negative outlook on the issuer default rating reflects the negative outlook on India's sovereign issuer default rating.
( With inputs from ANI )
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