Canara Bank – CFS Raised; Other Ratings Affirmed

Capital Intelligence Ratings (CI Ratings or CI) today announced that it has raised the Core Financial Strength (CFS) rating of Canara Bank (CB or the Bank) to ‘bb’ from ‘bb-’. At the same time, CI Ratings has affirmed CB’s Long-Term Foreign Currency Rating (LT FCR) and Short-Term Foreign Currency Rating (ST FCR) of ‘BBB-’ and ‘A3’, respectively; the Bank Standalone Rating (BSR) of ‘bb’; and the Extraordinary Support Level (ESL) of High. The Outlook for the LT FCR and BSR is Stable.

The upward revision of the Bank’s CFS reflects the ongoing improvement in key financial fundamentals (specifically asset quality, profitability and capital adequacy) that we believe are sustainable. However, as per CI’s methodology, this does not impact the BSR or the LT FCR, which have been affirmed. The Bank’s LT FCR is set two notches above its BSR in view of the high likelihood of extraordinary support in case of need from the government, a majority shareholder. The…