| Credit Agricole Corporate and Investment Bank | ||
| Rating Reaffirmed | ||
| Rating Action | ||
| ||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||
| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A1+’ rating on the certificate of deposit programme of Credit Agricole Corporate and Investment Bank India (CACIB India), the Indian branch operations of Credit Agricole Corporate and Investment Bank (CACIB).
On May 02, 2023, S&P Global Ratings’ (S&P) had reaffirmed its ratings on the parent, CACIB at ‘A+/Stable/A-1’. The outlook reflects S&P’s view on the Group’s disciplined underwriting standards, sufficient coverage of impaired assets and improved capitalization because of low risk profile. However, the revenue from retail activities will remain constrained by higher interest rates
The rating on CACIB India continues to be driven by the ratings of S&P on CASA (core bank of the group Crédit Agricole [GCA]). CACIB is a subsidiary of CASA, the central entity under GCA. This also reflects the support the Indian branch is expected to receive from CACIB and the adequate capitalisation. These strengths are partially offset by small scale of operations and average earnings profile.
CACIB India reported only Rs 2.93 crore (0.06%) of non-performing assets on its books as on March 31, 2023. Furthermore, under the August 2020 Resolution Framework for Covid-19-related Stress of the Reserve Bank of India (RBI), CACIB India had nil restructured accounts as on March 31, 2023. |
Key Rating Drivers & Detailed Description Strengths:
CACIB India remains adequately capitalised, as reflected in Tier I and overall capital adequacy ratio of 11.62% and 13.65%, respectively, as on March 31, 2023 (12.61% and 14.87%, respectively, as on March 31, 2022). Furthermore, networth remains adequate for the current scale of operations at Rs 2,843 crore as on March 31, 2023 (excluding interest free funds received from CACIB Paris to deposit Credit Risk Mitigants for regulatory purposes) against Rs 2,824 crore a year earlier.
The bank will maintain an adequate capital position over the medium term and will raise capital from the head office as and when required.
Weaknesses:
CACIB India focuses on providing loans and fee-based products, such as foreign exchange, interest rate derivatives, trade financing and debt market products. From fiscal 2023 the bank has increased its exposure towards longer tenure loans with duration of 3-5 years. It comprises ~20% of the total advances as on March 31, 2023. Lending operations continue to be on a small scale, with net advances of Rs 5,090 crore as on March 31, 2023, against Rs 4,937 crore as on March 31, 2022.
The bank will improve its market position gradually but will remain a small player in the banking industry over the medium term.
Being a corporate financier, CACIB India has a chunky asset portfolio, with the top 20 borrowers constituting around 38% of the loan book as on March 31, 2023. While the gross non-performing assets (GNPAs) stood at 0.06% (Rs 2.93 crore) as on March 31, 2023, the loan book remains vulnerable to concentration risks, wherein slippages in 1-2 accounts can lead to sharp increase in GNPAs. |
Liquidity: Superior Liquidity remains superior, supported by investments of around Rs 5,572 crore (60% of net demand and time liabilities) in securities, classified under the statutory liquidity ratio, as on March 31, 2023. Liquidity coverage ratio was 177% for the quarter ended March 31, 2023, and was higher than the regulatory requirement. Liquidity also benefits from access to systemic sources of funds, such as the liquidity adjustment facility from the RBI, and the call money market. |
Rating Sensitivity factors Downward factors
|
About the Company CACIB is the capital market and corporate financing arm of the GCA and is among the largest corporate and investment banking players in France. It has been present in India since 1981 and has five branches in the country. The branches in India deal with large multinational companies that already have global relationships with CACIB.
In fiscal 2023, CACIB India reported profit (after tax) of Rs 81 crore on total income (net of interest expense) of Rs 361 crore against Rs 76 crore and Rs 334 crore, respectively, in the previous fiscal. Return on assets stood at 0.44% in fiscal 2023 as against 0.48% in fiscal 2022 |
Key Financial Indicators
|
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Criteria Details
|