Citicorp Finance (India) Limited

Transcription

1 Summary of rated instruments Instrument* Citicorp Finance (India) Limited December 17, 2018 Previous Rated (Rs. crore) Current Rated (Rs. crore) Rating Action Secured bank Lines Programme ; assigned/outstanding Non-Convertible Debenture Programme (NCD) 12, , ; outstanding Commercial Paper 4, , [ICRA]A1+; outstanding Long term Market Linked Debenture Programme (MLD) 3, , ; outstanding Short Term Debt Programme (ICD) 2, , [ICRA]A1+; outstanding Total 24, , *Instrument details are provided in Annexure-1 Rationale The assigned rating derives significant strength from the company s ultimate parentage in the form of Citibank NA 1, which is rated A1/On review for possible upgrade by Moody s Investors Service. CFIL also enjoys a high level of operational synergies with its parent, with senior management oversight, common risk management systems and standards, treasury platforms and liability structuring expertise. Outlook: Stable The ratings draw significant strength from CFIL s ultimate parent, Citibank NA. The outlook is Stable on the expectation that CFIL would remain strategically important to its parent and support from the parent would be forthcoming as and when required. The outlook may be revised to Negative if there is a significant deterioration in the parent s credit profile and there is a change in the likelihood of support from the parent. The outlook can also be revised to Negative if there is a significant deterioration in the asset quality and solvency indicators and, hence, CFIL s profitability. Key rating drivers Credit strengths Strong parentage enabling access to funding and managerial support - CFIL s ratings are underpinned by the support from the ultimate parent Citibank NA (rated Moody s A1/on review for possible upgrade) and any dilution in the support or a revision in the parent s international credit rating would be a key rating sensitivity. CFIL also enjoys a high level of operational synergies with its parent, with senior management oversight, common risk management systems and standards, treasury platforms and liability structuring expertise. 1 Citibank NA is estimated to hold a 93.3% stake in CFIL through its 100% subsidiary, Citibank Overseas Investment Corporation 1

2 Strong capitalisation CFIL s capitalisation levels are commensurate with its current scale of operations, with a gearing of 1.52 times as on March 31, The company reported a healthy capital adequacy (CRAR) of 38.15% as on September 30, In ICRA s opinion, the company would be able to fund its targeted growth while maintaining prudent capitalisation levels without any external capital requirement. At the same time, ICRA expects support from the parent to be forthcoming, if required. Access to diverse funding sources - The company s total borrowings stood at Rs. 6,102 crore as on September 30, 2018 compared to Rs. 5,840 crore as on March 31, 2018, and Rs. 6,857 crore as on March 31, The company s funding mix is diversified with 58% of the borrowings, as on September 30, 2018 in the form of long term debentures, 40% in the form of inter-corporate borrowings and the rest in the form of commercial papers. Comfortable asset liability profile and liquidity profile - The ratings factor in CFIL s comfortable liquidity position given no asset liability mismatches in any time bucket and its strong financial flexibility in tapping long-term funding at competitive rates. The liquidity profile is further supported by adequate unutilised bank limits (Rs. 2,500 crore as on September 30, 2018) which the company can draw down, if required. Credit challenges Ability to control asset quality in competitive operating environment; shift towards larger ticket loans - ICRA notes CFIL s increasing share of the portfolio towards relatively larger ticket corporate loans and trade finance loans (increased to 47% as on September 30, 2018 from 40% as on March 31, 2018). While such exposures, so far, have been to high credit-rated entities, they also expose the company to asset quality related issues arising from higher concentration. Going forward, the company s ability to maintain asset quality while expanding the portfolio across asset classes would remain an important rating consideration. Low profitability indicators; some compression in Net Interest margins (NIMs) In FY2018, there was a marginal compression in the company s NIMs as yields declined. The operating expenses and credit costs were stable at 1.98% of ATA and 0.10% of ATA respectively, in FY2018. Consequently, the company s return on average assets (ROA) declined marginally to 1.32% in FY2018 from 1.50% in FY2017. Going forward, the company s ability to maintain NIMs and improve profitability would be a key rating monitorable. Liquidity Position: The liquidity profile of the company is comfortable, and as on November 30, 2018, ALM profile indicate a positive cumulative mismatch of 21% of total assets in the less than 6 months bucket. As on November 30, outflows due to repayments assuming that call options are exercised, over the next six months stood at Rs crore, while collections expected from loan assets inflows were at Rs crore. The company also has unutilized lines of Rs. 2,500 crore as on November 30, 2018 which it can use to meet the future funding requirements. CFIL enjoys strong financial flexibility to mobilized long term funding on the back of its parentage and access to HNI investors. ICRA expects the liquidity support from the parent to be forthcoming, if required. CFIL also has and takes comfort from CFIL s access to Rs. 1,300 unsecured unutilized working capital limit from Citibank NA. Going forward, for incremental disbursements, the ICRA expects CFIL to issue fresh debt via market instruments. 2

3 Analytical approach: Analytical Approach Applicable Rating Methodologies Parent/Group Support Consolidation / Standalone Comments ICRA s Credit Rating Methodology for Non-Banking Finance Companies Ultimate Parent / Investor: Citibank NA The assigned rating derives significant strength from the company s ultimate parentage in the form of Citibank NA, which is rated A1/On Review for possible Upgrade by Moody s Investors Service. CFIL also enjoys a high level of operational synergies with its parent, with senior management oversight, common risk management systems and standards, treasury platforms and liability structuring expertise. ICRA expects the liquidity support from the parent to be forthcoming, if required. CFIL also has access to Rs. 1,300 unsecured unutilized working capital limit from Citibank NA. The ratings are based on the standalone financial statements of the issuer. About the company: Citicorp Finance (India) Limited (CFIL) is registered as an NBFC with the Reserve Bank of India, and is ultimately owned by Citigroup Inc. In November 2013, the High Court of Delhi and in December 2013, the High Court of Mumbai approved the merger of CFIL with CCFIL. Subsequently, the name of the combined entity was changed to Citicorp Finance (India) Limited. The company operates through its network of 37 offices, covering more than 60 hubs and 200 spokes. CFIL s total on-book loans and advances stood at Rs. 9,105 crore as on September 30, 2018 vis-à-vis Rs. 8,944 crore as on March 31, 2018, and Rs. 9,499 crore as on March 31, The loan book reduced largely on account of a decline in the Loan against Shares (LAS) book, which is dependent on the vagaries of the capital markets. The company saw a decline in demand from its clients in this segment. While corporate loans accounted for around 47% of the on-book loans, as on September 30, 2018, loan against shares accounted for 24%, personal and trade finance loans for 26%, and commercial vehicle and construction equipment loans for the balance. CFIL reported a net profit of Rs. 139 crore on a total income of Rs. 796 crore in FY2018 compared to a net profit of Rs. 148 crore on a total income of Rs. 847 crore in FY2017. The company s net worth stood at Rs. 3,914 crore as on March 31,

4 Key financial indicators (audited) FY 2017 FY 2018 Total income (Rs. crore) Profit after tax (Rs. crore) Net worth (Rs. crore) 3,775 3,914 Loan book (Rs. crore) 9,499 8,944 Borrowings (Rs. crore) 6,857 5,840 Total assets (Rs. crore) 10,894 10,170 Return on average assets (%) 1.50% 1.32% Return on average networth (%) 4.08% 3.63% Gross NPA (%) 0.03% 0.05% Net NPA (%) 0.02% 0.03% Gearing (Times) Net NPA/Networth 0.04% 0.07% Note: in Rs. crore Source: Company, ICRA Research Status of non-cooperation with previous CRA: Not applicable Any other information: None 4

5 Rating history for last three years: Instrument Long term Market Linked Debenture programme Nonconvertible Debenture programme Commercial Paper Secured bank lines Short Term Debt Programme (ICD) Type Long Term Long Term Short Term Long Term Short Term Rated (Rs. crore) Outstanding (Rs Crore) 4, , , , Current Rating (FY2019) Chronology of Rating History for the past 3 years FY2018 FY2017 FY2016 Dec-18 Aug 2018 May 2018 Jan-18 Dec-16 Feb-16 4, [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ [ICRA]A Nil ; assigned 2, [ICRA]A1+ [ICRA]A1+ [ICRA]A Complexity level of the rated instrument: ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The classification of instruments according to their complexity levels is available on the website 5

6 Annexure-1: Instrument Details ISIN Number Instrument Name Date of Issuance/ Sanction Coupon Rate Maturity Date Rated (in Rs. crore) Rating INE915D07SO5 MLD 28-Sep-15 NA 30-Sep (Stable) INE915D07SR8 MLD 30-Oct-15 NA 30-Oct (Stable) INE915D07SS6 MLD 19-Nov-15 NA 19-Nov (Stable) INE915D07SX6 MLD 22-Jan-16 NA 22-Jan (Stable) INE915D07SZ1 MLD 29-Jan-16 NA 29-Jan (Stable) INE915D07TC8 MLD 29-Jan-16 NA 29-Jan (Stable) INE915D07TK1 MLD 25-Feb-16 NA 25-Feb (Stable) INE915D07TL9 MLD 25-Feb-16 NA 25-Feb (Stable) INE915D07TO3 MLD 29-Feb-16 NA 29-Mar (Stable) INE915D07TP0 MLD 29-Feb-16 NA 29-Mar (Stable) INE915D07TR6 MLD 16-Mar-16 NA 16-Mar (Stable) INE915D07UG7 MLD 27-Apr-16 NA 25-Oct (Stable) INE915D07UH5 MLD 27-Apr-16 NA 25-Oct (Stable) INE915D07UI3 MLD 27-Apr-16 NA 25-Oct (Stable) INE915D07UJ1 MLD 29-Apr-16 NA 25-Oct (Stable) INE915D07UK9 MLD 29-Apr-16 NA 25-Oct (Stable) INE915D07UL7 MLD 29-Apr-16 NA 25-Oct (Stable) INE915D07UN3 MLD 23-May-16 NA 23-Nov (Stable) INE915D07UO1 MLD 23-May-16 NA 23-Nov (Stable) INE915D07UU8 MLD 31-May-16 NA 30-Nov (Stable) INE915D07UV6 MLD 31-May-16 NA 30-Nov (Stable) INE915D07UW4 MLD 31-May-16 NA 30-Nov (Stable) INE915D07UY0 MLD 17-Jun-16 NA 17-Jun (Stable) INE915D07VI1 MLD 30-Jun-16 NA 30-Jun (Stable) INE915D07VO9 MLD 28-Jul-16 NA 27-Jul (Stable) INE915D07VR2 MLD 08-Aug-16 NA 07-Aug (Stable) INE915D07VT8 MLD 23-Aug-16 NA 24-Aug (Stable) INE915D07VU6 MLD 23-Aug-16 NA 24-Aug (Stable) INE915D07VW2 MLD 30-Aug-16 NA 31-Aug (Stable) INE915D07VX0 MLD 30-Aug-16 NA 31-Aug (Stable) INE915D07WB4 MLD 31-Aug-16 NA 31-Aug (Stable) INE915D07WE8 MLD 19-Sep-16 NA 18-Sep (Stable) INE915D07WF5 MLD 19-Sep-16 NA 18-Sep (Stable) INE915D07WL3 MLD 27-Sep-16 NA 28-Sep (Stable) INE915D07WM 27-Sep-16 NA 28-Sep MLD 1 (Stable) INE915D07WP4 MLD 30-Sep-16 NA 30-Sep (Stable) INE915D07WQ2 MLD 30-Sep-16 NA 30-Sep (Stable) INE915D07WR0 MLD 30-Sep-16 NA 30-Sep (Stable) INE915D07WY6 MLD 28-Oct-16 NA 28-Oct (Stable) INE915D07XC0 MLD 28-Oct-16 NA 28-Oct (Stable) INE915D07XD8 MLD 28-Oct-16 NA 28-Oct (Stable) INE915D07XS6 MLD 31-Jan-17 NA 29-Jan (Stable) INE915D07XU2 MLD 31-Jan-17 NA 30-Jan (Stable) INE915D07XZ1 MLD 28-Feb-17 NA 01-Mar (Stable) INE915D07YE4 MLD 08-Mar-17 NA 08-Mar (Stable) 6

7 ISIN Number Instrument Name Date of Issuance/ Sanction Coupon Rate Maturity Date Rated (in Rs. crore) Rating INE915D07YF1 MLD 08-Mar-17 NA 09-Mar (Stable) INE915D07YH7 MLD 17-Mar-17 NA 17-Mar (Stable) INE915D07YJ3 MLD 17-Mar-17 NA 17-Mar (Stable) INE915D07YL9 MLD 17-Mar-17 NA 17-Mar (Stable) INE915D07YO3 MLD 22-Mar-17 NA 22-Jul (Stable) INE915D07YQ8 MLD 24-Mar-17 NA 24-Mar (Stable) INE915D07YR6 MLD 24-Mar-17 NA 22-Mar (Stable) INE915D07YW6 MLD 31-Mar-17 NA 31-Mar (Stable) INE915D07YX4 MLD 31-Mar-17 NA 31-Mar (Stable) INE915D07ZA9 MLD 07-Apr-17 NA 07-Apr (Stable) INE915D07ZE1 MLD 07-Apr-17 NA 07-Apr (Stable) INE915D07ZG6 MLD 21-Apr-17 NA 21-Apr (Stable) INE915D07ZH4 MLD 21-Apr-17 NA 21-Apr (Stable) INE915D07ZI2 MLD 25-Apr-17 NA 25-Aug (Stable) INE915D07ZK8 MLD 27-Apr-17 NA 26-Apr (Stable) INE915D07ZL6 MLD 27-Apr-17 NA 26-Apr (Stable) INE915D07ZM4 MLD 28-Apr-17 NA 27-Apr (Stable) INE915D07ZN2 MLD 28-Apr-17 NA 27-Apr (Stable) INE915D07ZP7 MLD 16-May-17 NA 17-May (Stable) INE915D07ZQ5 MLD 16-May-17 NA 17-May (Stable) INE915D07ZR3 MLD 19-May-17 NA 19-May (Stable) INE915D07ZS1 MLD 19-May-17 NA 19-May (Stable) INE915D07ZT9 MLD 19-May-17 NA 19-May (Stable) INE915D07ZV5 MLD 19-May-17 NA 19-May (Stable) INE915D07ZW3 MLD 23-May-17 NA 24-May (Stable) INE915D07ZX1 MLD 26-May-17 NA 26-May (Stable) INE915D07ZY9 MLD 26-May-17 NA 26-May (Stable) INE915D07ZZ6 MLD 26-May-17 NA 26-May (Stable) INE915D07A05 MLD 31-May-17 NA 31-May (Stable) INE915D07A13 MLD 31-May-17 NA 31-May (Stable) INE915D07A21 MLD 31-May-17 NA 31-May (Stable) INE915D07A39 MLD 31-May-17 NA 31-May (Stable) INE915D07A47 MLD 31-May-17 NA 31-May (Stable) INE915D07A62 MLD 31-May-17 NA 01-Jun (Stable) INE915D07A96 MLD 15-Jun-17 NA 15-Jun (Stable) INE915D07B04 MLD 15-Jun-17 NA 15-Jun (Stable) INE915D07B12 MLD 15-Jun-17 NA 15-Jun (Stable) INE915D07B79 MLD 23-Jun-17 NA 23-Jun (Stable) INE915D07B87 MLD 23-Jun-17 NA 23-Jun (Stable) INE915D07B95 MLD 28-Jun-17 NA 28-Jun (Stable) INE915D07C03 MLD 28-Jun-17 NA 28-Jun (Stable) INE915D07C11 MLD 28-Jun-17 NA 28-Jun (Stable) INE915D07C29 MLD 28-Jun-17 NA 28-Jun (Stable) INE915D07C37 MLD 28-Jun-17 NA 28-Jun (Stable) INE915D07C45 MLD 28-Jun-17 NA 28-Jun (Stable) INE915D07C52 MLD 30-Jun-17 NA 30-Jun (Stable) INE915D07C60 MLD 30-Jun-17 NA 30-Jun (Stable) INE915D07C94 MLD 31-Jul-17 NA 31-Jul (Stable) 7

8 ISIN Number Instrument Name Date of Issuance/ Sanction Coupon Rate Maturity Date Rated (in Rs. crore) Rating INE915D07D02 MLD 31-Aug-17 NA 31-Aug (Stable) INE915D07D28 MLD 27-Sep-17 NA 27-Sep (Stable) INE915D07D44 MLD 25-Oct-17 NA 24-Jan (Stable) INE915D07D51 MLD 30-Oct-17 NA 01-Nov (Stable) INE915D07D44 MLD 09-Nov-17 NA 24-Jan (Stable) INE915D07D44 MLD 08-Dec-17 NA 24-Jan (Stable) INE915D07E01 Fixed 14-Dec % 14-Dec (Stable) INE915D07D44 MLD 15-Dec-17 NA 24-Jan (Stable) INE915D07D44 MLD 20-Dec-17 NA 24-Jan (Stable) INE915D07E35 MLD 22-Jan-18 NA 31-Mar (Stable) INE915D07E43 MLD 30-Jan-18 NA 30-Jan (Stable) INE915D07E50 MLD 27-Feb-18 NA 31-Mar (Stable) INE915D07E35 MLD 28-Feb-18 NA 31-Mar (Stable) INE915D07E35 MLD 07-Mar-18 NA 31-Mar (Stable) INE915D07F26 MLD 20-Mar-18 NA 20-Jun (Stable) INE915D07E35 MLD 22-Mar-18 NA 31-Mar (Stable) INE915D07F59 MLD 26-Apr-18 NA 26-Apr (Stable) INE915D07F75 MLD 09-May-18 NA 09-May (Stable) INE915D07F75 MLD 18-May-18 NA 09-May (Stable) INE915D07F83 MLD 18-May-18 NA 19-Aug (Stable) INE915D07F83 MLD 21-May-18 NA 19-Aug (Stable) INE915D07G09 MLD 29-May-18 NA 29-May (Stable) INE915D07F83 MLD 04-Jun-18 NA 19-Aug (Stable) INE915D07F83 MLD 08-Jun-18 NA 19-Aug (Stable) INE915D07F83 MLD 20-Jun-18 NA 19-Aug (Stable) INE915D07G33 MLD 28-Jun-18 NA 28-Jun (Stable) INE915D07F83 MLD 02-Jul-18 NA 19-Aug (Stable) INE915D07G41 MLD 16-Jul-18 NA 16-Oct (Stable) INE915D07G58 Fixed 19-Jul % 27-Jan (Stable) INE915D07G41 MLD 24-Jul-18 NA 16-Oct (Stable) INE915D07G82 MLD 30-Jul-18 NA 29-Jul (Stable) INE915D07G90 Fixed 31-Jul % 31-Jan (Stable) INE915D07H08 Fixed 09-Aug % 07-Feb (Stable) INE915D07G41 MLD 14-Aug-18 NA 16-Oct (Stable) INE915D07H16 MLD 31-Aug-18 NA 31-Aug (Stable) INE915D07G41 MLD 06-Sep-18 NA 16-Oct (Stable) INE915D07H24 MLD 06-Sep-18 NA 06-Sep (Stable) INE915D07H32 MLD 06-Sep-18 NA 06-Sep (Stable) INE915D07H40 Fixed 10-Sep % 13-Mar (Stable) INE915D08BW2 Fixed 18-Sep % 31-Jan (Stable) INE915D07G41 MLD 21-Sep-18 NA 16-Oct (Stable) INE915D07H57 MLD 21-Sep-18 NA 21-Mar (Stable) 8

9 ISIN Number Instrument Name Date of Issuance/ Sanction Coupon Rate Maturity Date Rated (in Rs. crore) Rating INE915D07G41 MLD 26-Sep-18 NA 16-Oct (Stable) INE915D07H16 MLD 28-Sep-18 NA 31-Aug (Stable) INE915D07G41 MLD 01-Oct-18 NA 16-Oct (Stable) INE915D07H65 MLD 09-Oct-18 NA 07-Oct (Stable) INE915D07H73 MLD 09-Oct-18 NA 07-Oct (Stable) INE915D07H73 MLD 17-Oct-18 NA 07-Oct (Stable) INE915D07H81 Fixed 24-Oct % 24-Apr (Stable) INE915D07H73 MLD 30-Oct-18 NA 07-Oct (Stable) INE915D07H65 MLD 01-Nov-18 NA 07-Oct (Stable) INE915D07H73 MLD 01-Nov-18 NA 07-Oct (Stable) INE915D07H73 MLD 22-Nov-18 NA 07-Oct (Stable) INE915D07H99 MLD 29-Nov-18 NA 30-Nov (Stable) Commercial paper programme Short Term Debt Programme (ICD) Secured bank lines programme Source: Citicorp Finance (India) Limited. NA NA days 4000 [ICRA]A1+ NA NA days 2000 [ICRA]A1+ NA NA NA 700 9

10 ANALYST CONTACTS Karthik Srinivasan Manushree Saggar Rohan Rustagi RELATIONSHIP CONTACT L. Shivakumar MEDIA AND PUBLIC RELATIONS CONTACT Ms. Naznin Prodhani Tel: Helpline for business queries: (open Monday to Friday, from 9:30 am to 6 pm) info@icraindia.com About ICRA Limited: ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency. Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. The international Credit Rating Agency Moody s Investors Service is ICRA s largest shareholder. For more information, visit 10

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