Mumbai, Domestic rating agency India Ratings today downgraded UCO Bank on concerns surrounding its asset quality and funding profile in the aftermath of lifting of global sanctions on Iran.
The Long-Term Issuer Rating has been downgraded to 'IND AA-' with a stable outlook on "deterioration in its asset quality as well as continued weakness in its funding profile", it said in a statement.
It added that following the lifting of sanctions on India-Iran bilateral oil trade, UCO Bank (which was used to facilitate the trade) has seen a sharp 23 per cent decline in its current account deposits.
Even on a standalone basis, UCO's profitability and capital buffers appear weaker than those of its peers.
Assuming that the government will continue to support, the outlook has been kept at "stable", it said.
It also downgraded United Bank of India's Additional Tier-I bonds to 'IND BBB' with a negative outlook, but affirmed the long-term rating on the Kolkata-headquartered bank at 'AA-' with a stable outlook.
The bonds have been downgraded on heightened risk of coupon deferral, led by continued pressure on profitability and a negative revenue reserve, it said.
It also affirmed Vijaya Bank's rating at 'IND AA-' placing its outlook at stable and Dena Bank at 'IND AA-' with a stable outlook.