Mumbai: Standard and Poors (S&P), the international rating agency, has reaffirmed its negative outlook for IDBI and ICICI. It has also said that IDBIs standalone credit profile is weaker than what its ratings implies.

S&P has said has said that ICICIs credit profile continues to be moderated by its asset quality, which is regarded as weak by international standards.

Although the institution is diversifying its business profile, many of its core wholesale market activities are of a higher risk than traditional short-term bank financing, and most non-traditional lines of business remain small in the context of the companys total operations, the rating agency said. Management and profitability pressures, as well as asset quality, remain key challenges for both ICICI and IDBI in the current operating environment.

S&P has also said that despite efforts by IDBI to re-evaluate its business strategy and position itself as a universal bank, it faces stiff challenge to compete effectively with competitors that are better placed to respond to changing market conditions, particularly at a time when it is addressing asset-quality problems and the structure and cost of funding.