Shiva Joshi, Pune
Credit rating agency Moody’s, on Friday, affirmed the credit ratings of State Bank of India to be positive along with the credit ratings of Bank of Baroda, Canara Bank and Punjab National Bank.
Long-term credit and foreign currency deposit ratings have been affirmed and updated, as these banks have maintained the long-term credit rating outlook as stable. “Credit conditions in India have gradually improved, with a significant reduction in the banks’ stock of legacy problem loans over the past three years”, the company stated in a statement.
However, it also stated that loans to SMEs (Small and Medium Enterprises) continue to put the asset quality of these banks at risk, as it expects this segment to be more vulnerable to interest rate hikes. They also confirmed SBI’s long-term Baa3 ratings for local and foreign currency bank deposits while the Baseline Credit Assessment (BCA) and Additional Tier 1 Securities Program (AT1) ratings are updated from ba2 and (P)B2 to “ba1” and (P)B1 respectively.
It has also upgraded the long-term local and foreign currency bank deposit ratings of all these three banks and Moody’s believes that while India’s economic growth will slow due to rising interest rates and a global slowdown, the South Asian economy will outperform other emerging markets. Based on these factors, the operating environment will continue to support a good outlook for the next 12 to 18 months.
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