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Indicative Year-to-Maturity: 5.45%
Detailed Information
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Fundamental View
AS OF 10 Jan 2023- The Export-Import Bank of India (EXIMBK) was founded in 1982. Its credit standing is built upon the key role it plays in the promotion of India’s cross border trade and investment development as India’s official export credit agency.
- EXIMBK is 100% owned by the Government of India. Given its crucial policy role, close governmental links and quasi-sovereign status, we view it as inconceivable that the Indian government would fail to provide EXIMBK with support in a timely manner, if needed.
- EXIMBK’s credit ratings are thus in line with the Indian sovereign, at Baa3(stb)/BBB-(stb)/BBB-(stb).
Business Description
AS OF 10 Jan 2023- EXIMBK presently serves as a growth engine for the internationalization efforts of Indian businesses, facilitating the import of technology and export product development, export production, export marketing, pre- and post-shipment, as well as overseas investment.
- As at 1H23, EXIMBK's loan portfolio is principally made up of export finance (80%) and term loans to exporters (13%), with remaining split among the financing of overseas investment, import finance, and export facilitation. 66% come under the policy business while the remaining are to the commercial business.
- By geography, the bank has a primary exposure of 45% to Africa, 45% to South Asia, 6% to rest of Asia, and 4% to the Americas and Europe.
Risk & Catalysts
AS OF 10 Jan 2023- As a quasi-sovereign issuer with backstops from the Government of India and the Reserve Bank of India (RBI), EXIMBK is rated in line with the Indian government at Baa3(stb)/BBB-(stb)/BBB-(stb). Any downgrades in India’s sovereign rating will have a negative impact on its credit ratings.
- EXIMBK’s policy role may require it to, at times, take on exposures that could lead to financial losses. This has led to poor asset quality and high impairment charges similar to the public sector commercial banks during the years leading up to the pandemic.
- Capital standing, however, is robust thanks to capital infusions from the Government of India which have been stepped up in recent years – INR 50 bn was injected in FY19, followed by infusions of INR 15 bn and INR 13 bn in FY20 and FY21 respectively. The bank continued to receive INR 7.5 bn in FY22 despite capital levels remaining strong during the year, and INR 15 bn from the FY23 budget has been allocated for EXIMBK.
Key Metrics
AS OF 10 Jan 2023| INR mn | 1H23 | FY22 | FY21 | FY20 | FY19 |
|---|---|---|---|---|---|
| Net Interest Margin (Annual) | 2.08% | 2.19% | 1.84% | 1.54% | 1.56% |
| ROAA | 1.19% | 0.54% | 0.19% | 0.10% | 0.07% |
| ROAE | 8.69% | 3.97% | 1.49% | 0.80% | 0.67% |
| Equity/Assets | 13.30% | 14.12% | 13.23% | 12.46% | 12.81% |
| Tier 1 Capital Ratio | 26.3% | 28.6% | 24.0% | 18.7% | 17.7% |
| Gross NPA Ratio | 6.14% | 3.56% | 6.69% | 8.75% | 11.34% |
| Provisions/Loans | 0.72% | 0.90% | 2.46% | 1.87% | 1.90% |
| Pre-Impairment Operating Profit / Average Assets | 2.21% | 2.31% | 2.13% | 1.66% | 1.74% |
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CreditSights View
AS OF 10 Jan 2023Exim Bank of India is the country’s key policy bank with full government support. It provides financial assistance to exporters and importers with a view to promote trade in India. It is 100% owned by the Government of India (GoI) and is a proxy to the India sovereign in international debt markets (quasi-sovereign status). The bank cannot be liquidated without the government’s approval and has a track record of government capital infusions. The bank’s asset quality is back on track after some wobbles in previous years. Capital levels are strong. We maintain a Market perform recommendation on the bank.
Recommendation Reviewed: January 10, 2023
Recommendation Changed: January 04, 2021
Recommended Issuers
Who We Recommend
Bank Rakyat Indonesia
Mitsubishi UFJ Financial Group
State Bank of India
Bond:
SBIIN 4.875 28
Credit Rating:
-/BBB/-
