Ratings agency CRISIL has downgraded the rating on Union Bank of India’s tier I and II bonds. The asset quality and income profile and profitability of public sector lender are expected to remain under pressure. The bank’s tier I and II bonds have been downgraded from ‘AAA’ to ‘AA+’. The rating, nevertheless, continues to factor in the support lenders are likely to receive from their majority owner Government of India.
Union Bank’s gross NPA ratio was high at 12.6% as on June 30, 2017 (11.2% as on March 31, 2017). Also, profitability is modest with the bank reporting a return on assets (RoA) of 0.1% (annualized) for the quarter ended June 30, 2017 (0.1 % for fiscal 2017).
