ICRA Lanka affirms issuer rating of [SL] AAA

ICRA Lanka Limited, a wholly owned subsidiary of ICRA Ltd., an associate of Moody's Investors Service, has reaffirmed the Issuer Rating of [SL] AAA (pronounced SL triple A)1 of ICICI Bank (Sri Lanka Branch). This is the highest-credit-quality rating assigned by ICRA Lanka and the rated entity carries the lowest credit risk. The rating in Sri Lanka is assigned on an eight-point scale developed specifically for the country and ranges from '[SL] AAA' to '[SL] D'. This rating scale ranks the relative default risk associated with issuers in Sri Lanka.

The rating factors in strong financial and operational support from the parent ICICI Bank (rated [ICRA] AAA/Stable), comfortable capitalization levels with a large proportion of the assets being deployed into Sovereign Securities/cash equivalents. The credit strengths are partially offset by small scale of the Sri Lankan operations, modest profitability and high credit concentration in the advances book.

ICICI Bank (Sri Lanka branch) commenced operations in January 2006 with focus on retail lending and remittance business. Subsequently, in line with the bank's global strategy, retail assets operations were curtailed CY2008 onwards. The bank's focus remains on corporate lending for India linked local corporates and reputed local companies.

The current retail portfolio is less than 1% of total advances running down from business carried out till 2008.

Total assets stood at Rs. LKR 10,831 million as on June 30, 2012 with the loan book accounting to LKR 2,643 million, while bulk of the remainder of the assets were deployed in liquid investments (government securities and interbank lending).