International credit rating agency S&P Global Ratings has affirmed its ‘BBB-‘ long-term rating and ‘A-3’ short-term rating on ICICI Bank, citing the bank’s strong business position and good business diversity as some of the key drivers.Speaking about the affirmation, S&P Global Ratings credit analyst Amit Pandey said that despite ICICI Bank’s weakening asset quality, the lender is satisfactorily capitalised and funded.He, however, pointed out that the private sector lender’s standalone credit profile has been lowered to ‘bbb-‘ from ‘bbb’ eariler. “This reflects our view that the bank’s asset quality will remain under pressure over the next 12 months.We have therefore revised our assessment of ICICI Bank’s risk position to moderate from adequate,” Pandey said.The analyst said he expected ICICI Bank’s credit costs to remain high because of the sustained pressure on its asset quality given the tough operating environment for capital-intensive sectors in India.“About 53% of the bank’s loans on a standalone basis are to the corporate and small and midsized enterprise segments. The rising stress in these exposures has led to an increase in the bank’s consolidated gross non-performing loan (NPL) ratio to 5.7% as of June 30, 2016, from 3.8% as of March 31, 2015. ICICI Bank’s exposure to power, metal/mining, and rig companies is likely to continue to contribute to further slippages, in our view,” Pandey said.Despite the elevated credit costs, the lender’s earnings are estimated to remain well above the industry average.The rating agency expects ICICI Bank’s core earnings to average around 1.2% of adjusted assets, compared with the industry average of 0.4%.“We expect the bank’s 12%-14% loan growth – the bulk of which is likely to be contributed by the retail segment as part of its de-risking strategy given the stable asset quality of the portfolio – to keep its risk-adjusted capital (RAC) ratio (pre-diversification) under S&P Global Ratings’ framework at 9.0%-9.5% over the next 12-18 months, commensurate with an adequate capital and earnings assessment,” S&P said.