India Ratings & Research (Ind-Ra) has affirmed Andhra Bank's (AB) long-term issuer rating at 'AA' with a stable outlook and short-term issuer rating at 'A1+'.

The ratings factor in AB's adequate capitalisation and strong regional franchisee in Andhra Pradesh.

The ratings are, however, constrained by the bank's elevated stress in loan portfolio, deteriorating profitability and weak funding profile. Ind-Ra is of the view that the steps being taken by the bank-including lowering portfolio concentration, increasing retail exposure and lowering bulk deposits-will help it to address the above issues.

Shares of the bank gained Rs 3.25, or 4.98%, to settle at Rs 68.45. The total volume of shares traded was 703,628 at the BSE (Tuesday).