ICRA Nepal assigns [ICRANP-IR] BBB+ issuer rating to Citizens Bank; upgrades bond rating to [ICRANP] LBBB+

ICRA Nepal Limited, the only credit rating agency of Nepal licensed by Securities Board of Nepal (SEBON), has assigned issuer rating of [ICRANP-IR] BBB+ to Citizens Bank International limited (CZBIL). As per ICRA Nepal, rated entity carries higher than average credit risk, however, the rating is only an opinion on the general creditworthiness of the bank and not specific to any particular debt instrument. On the other hand, ICRA Nepal has upgraded the rating of subordinated bonds of CZBIL worth Rs 50 crore from [ICRANP] LBBB to one step higher grade at [ICRANP] LBBB+. As per the report, instruments with this rating carry moderate credit risk. As per ICRA Nepal, the rating upgradation of CZBIL factors in the bank’s adequate track record (operating since Apr-2007), improving market positioning through franchise expansion and scale up in operations while maintaining adequate profitability and progressively improving its assets quality indicators despite acquisition of weak financial institutions. However, the ratings are constrained by the bank’s inferior deposits profile with lower proportion of low cost deposits, which has led to high cost of deposits among its competitors. The ratings also take into account the unstable political conditions and uncertain operating environment that banks in Nepal are currently facing. Also See: Previous Credit Ratings assigned by ICRA Nepal