Mumbai, Aug. 20 -- India Ratings and Research stated that the rating upgrade factors in an improvement in the consolidated profitability in 1Q FY26 due to a material reduction in RIDF exposure to 9% (FY22: 11.5%) and a target of 5% by FY27, leading to improved net interest margins (NIMs).

The increased focus on retail and SME in the loan mix to around 60% in FY25 (FY20: 36%) indicates a shift away from corporate lending, resulting in sustainable improvement in return on assets (ROA).

Furthermore, the upgrade also reflects the bank's improved asset quality, minimal provisioning for legacy stressed assets (net non-performing assets + net security receipts +net restructured assets), and ongoing enhancement in the deposit profile.

Moreover...