Citizens Bank Rating Downgraded to BBB by ICRA Nepal

26th April 2026, Kathmandu

In a significant development for the capital markets, ICRA Nepal Limited has officially downgraded the credit ratings of Citizens Bank International Limited.

Citizens Bank Rating Downgraded

The decision, announced in late April 2026, involves removing the bank from its previous “Watch with Negative Implications” status and assigning a lower rating grade. This adjustment reflects the credit agency’s comprehensive analysis of the bank’s latest financial performance, asset quality, and its ability to maintain a capital cushion amidst moderate credit risks.

Issuer Rating Shift from BBB+ to BBB

According to the latest assessment by ICRA Nepal, the issuer rating for Citizens Bank International Limited has been reduced from BBB+ to BBB. Under the ICRA rating scale, a BBB rating signifies that an institution is considered to have a moderate degree of safety regarding the timely servicing of financial obligations. While the bank remains within the investment grade category, the downgrade indicates a relative increase in credit risk.

The rating action is primarily driven by:

Sustained Asset Quality Pressure: The bank has faced challenges with its non performing assets (NPLs), which have shown an upward trend in recent quarters.

Subdued Internal Capital Generation: Moderate profitability and high credit costs have impacted the bank’s ability to bolster its core capital organically.

Solvency Profile: While the bank maintains capital adequacy ratios above the regulatory minimum, the “thin cushion” at the Tier I level remains a point of concern for analysts.

Downgrade of Subordinated Debentures

In addition to the issuer rating, ICRA Nepal has also lowered the rating of the bank’s subordinated debentures. Specifically, the 10.25 percent interest bearing debenture, which is scheduled to mature in April 2030, has seen its rating revised from BBB+ to BBB.

This specific instrument, with an issue size of approximately two and a half billion rupees, is now classified as having a moderate degree of safety but carries a higher risk profile compared to its standing in previous years. Investors holding these debentures are advised to note that the plus (+) or minus (-) signs in these ratings denote their relative position within the BBB category.

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Bank Overview and Market Performance as of 2026

Despite the rating downgrade, Citizens Bank International remains a prominent player in Nepal’s Class “A” commercial banking space. Commencing its journey in April 2007, the bank has built a robust nationwide network.

As of the mid-January 2026 (Poush 2082) reporting period:

Branch Network: The bank operates roughly 200 branches, 3 extension counters, and 168 ATMs across the country.

Market Share: Its share in the national deposit market is approximately 3.02 percent, while its lending market share stands slightly higher at 3.41 percent.

Ownership Structure: The promoter to public shareholding ratio is maintained at 51:49, with the Citizen Investment Trust (CIT) holding a notable 3.35 percent stake.

Financial Resilience: The bank’s total assets were reported at approximately two hundred and forty five billion rupees in early 2026.

Implications for Stakeholders and Investors

The move from BBB+ to BBB is a signal for stakeholders to maintain a vigilant outlook on the bank’s risk management strategies. While a BBB rating is still considered acceptable for institutional investors, it underscores the need for the bank to improve its asset quality and cost of funds to regain its previous standing.

For retail depositors, the bank remains a “moderately safe” institution, and its wide physical presence and digital banking infrastructure continue to provide high utility. However, for those invested in the bank’s equity or long term debt instruments, the downgrade highlights the importance of monitoring quarterly non performing loan (NPL) ratios and the Net Interest Margin (NIM) throughout 2083.

Conclusion

The credit rating downgrade of Citizens Bank International Limited by ICRA Nepal serves as a reminder of the rigorous standards expected of commercial banks in 2026. While the bank possesses a strong operational track record and an experienced management team, the current economic climate demands a sharper focus on asset quality and capital resilience. As the bank enters the new fiscal quarter in Baisakh 2083, its ability to navigate these credit challenges will be the defining factor in its future rating trajectory and its competitive position in the Nepalese financial market.

For More: Citizens Bank Rating Downgraded