India Ratings & Research (Ind-Ra) has upgraded City Union Bank's (CUB) long-term issuer rating to 'A+' from 'A'. The outlook is stable. The agency has also upgraded CUB's Rs 400 million lower Tier 2 subordinated debt programme to 'A+' from 'IND A'.

The upgrade reflects CUB’s demonstrated ability to manage asset quality and its healthy capitalisation levels which are likely to be sustained.

The prevailing economic environment is likely to exert pressure on the bank's loan portfolio leading to a rise in delinquencies. However, its robust pre-provision profitability provides a comfortable cushion to absorb expected increases in credit costs.