MUMBAI: India Ratings said that it has upgraded ING Vysya Bank's rating by a notch on better capitalisation levels and stronger provisioning done in the past.

Apart from upgrading the rating to 'IND AA' from 'IND AA-', it also gave a stable outlook on it.

"The upgrade reflects an improvement in ING Vysya's credit profile as reflected in its stronger capitalisation levels and improving profitability buffers in the form of rising pre-provision operating profits (PPOP)," it said.

The rating agency said the ongoing economic gloom may have some impact on the private sector lender's assets leading to a rise in delinquencies, but its high specific loan loss reserves and improving PPOP provide an adequate cushion.

It clarified that the ratings action is not driven by expectations of support from its parent ING Bank NV/ING Group.

The Bangalore-headquartered bank had a core Tier-I capital at 14.49 per cent as of December 2013, boosted by 1836-crore infusions in July 2013.

It said the bank is likely to maintain an elevated Tier-I of over 11 per cent mainly in order to facilitate a smooth transition to the Basel III regime.

India Ratings also drew attention towards the high contribution (36.8 per cent) of the SME sector in the bank's total advances and added that it has been able to increase the yields from this segment, which shows it is able to price risk better.

Shares in ING Vysya Bank, on Wednesday, ended at 568.55 apiece on the BSE, down 0.17 per cent from the previous close.