Standard & Poor's (S&P) ratings services assigned ratings of 'BBB-' long-term and 'A-3' short-term with a negative outlook on private lender Kotak Mahindra Bank, said the media report.
The agency's assessment of Kotak Mahindra Bank's risk position reflects the bank's acceptable credit costs through the cycle and cautious growth strategy in a challenging operating environment, the report said.
"We expect earnings to be under pressure over the next two years. This is because of high credit costs in the commercial vehicle, commercial equipment, and commercial real estate businesses, and marked-to-market losses on bonds because of rising interest rates. Nevertheless, we expect earnings to remain strong," said Amit Pandey, credit analyst at S&P.
The report said the bank faces an additional challenge of high exposure to commercial real estate, which is about 13 per cent of loans as of March 2013, which could undergo severe stress if real estate prices crash.