ICRA reaffirms IDBI Bank ratings with stable outlook

ICRA Ratings reaffirmed IDBI Bank Limited's long-term ratings at '[ICRA]AA (Stable)' and short-term rating at '[ICRA]A1+' as of September 18, 2025. This affirmation reflects the bank's healthy profitability, driven by recoveries from legacy stressed assets and strong internal capital generation. The capital-to-risk weighted assets ratio (CRAR) stood at 25.39% as of June 30, 2025, with a Tier I ratio of 23.71%. The bank's return on assets (RoA) was 2.02% (annualised) in Q1 FY2026.

Despite the positive ratings, ICRA notes that the conclusion of the stake sale by Life Insurance Corporation of India (LIC) and the Government of India (GoI) is still pending. The bank's vulnerable loan book, including SMA-1 and SMA-2, remains manageable at 1.3% of standard advances. Its liquidity position is strong, with a daily average liquidity coverage ratio (LCR) of 128.11% for Q1 FY2026, well above the regulatory requirement.

ICRA has withdrawn ratings for certain infrastructure bonds and subordinated debt that have been fully redeemed or withdrawn at the issuer's request, including the INR3,000.00 crore infrastructure bonds and INR302.00 crore senior and lower Tier II bonds. Total rated amounts now stand at INR51,003.00 crore.