Rating agency Moody’s Investors Service has revised its outlook on IndusInd Bank to negative from stable because of concerns over a further deterioration in its asset quality.

However, it has retained the private sector bank’s rating at Baa-3/P-3. Baa3 denotes the lowest rating in investment grade on long-term corporate obligation which carries moderate risks.

“The outlook has been revised to negative to account for the risk of further asset quality deterioration,” the rating agency said in a note.

Moody’s observed that the bank has seen a deterioration in its asset quality, particularly in the corporate segment over the last few quarters, which it said was because of tight refinancing conditions faced by borrowers.

The refinancing conditions continue to remain tight, particularly for the weaker borrowers, the agency said, pointing out that IndusInd Bank has a high exposure of 8 per cent to the troubled realty sector.

It added that the turbulence in the telecom sector can negatively impact the bank.

Moody’s said it does not have any concern on the governance front for the bank and made it clear that its risk management framework is consistent and commensurate with its risk appetite.

An upgrade in the bank’s rating is unlikely for the next 12-18 months given the negative outlook, it said, adding that the outlook can be revised to stable if the non performing asset (NPA) ratios are maintained at the current level over the next 12-18 months.

During the third quarter of 2019-20, provisions at IndusInd Bank rose to Rs 1,043.45 crore against Rs 606.68 crore in the same period last year. Its gross NPAs in absolute terms rose to Rs 4,578.43 crore from Rs 1,968.15 crore last year.

AllBank loss

Allahabad Bank on Tuesday reported an over two-fold jump in standalone net loss for the December quarter at Rs 1,986.26 crore on higher bad loans and provisioning.

The state-owned lender had reported a net loss of Rs 732.81 crore in the corresponding period of the previous fiscal.

Total income during the quarter grew to Rs 4,860.35 crore from Rs 4,756.88 crore in the same period of 2018-19. The bank’s gross NPAs rose to 18.93 per cent of the gross advances by the end of the December quarter against 17.81 per cent earlier.