Moody's downgrades SBI's standalone profile on asset quality, profitability concerns
Moody's said SBI's ratings could be downgraded if India's sovereign rating is downgraded, reflecting the high interlinkages between the banks' credit profile and that of the government
- Aug 26, 2020,
- Updated Aug 26, 2020 12:25 AM IST
Moody's Investor Service has downgraded Baseline Credit Assessment (BCA) of State Bank of India (SBI) to ba2 from ba1. The downgrade reflects ratings agency's view that SBI's asset quality and profitability will deteriorate on back of economic shock from the coronavirus pandemic in an already slowing economy.
Moody's has also downgraded SBI's foreign currency preferred stock non-cumulative MTN program rating to (P)B2 from (P)B1, and the rating of the preferred stock non-cumulative (Basel III compliant Additional Tier 1 securities) bond issued out of its DIFC branch to B2(hyb) from B1(hyb). Moody's has maintained SBI's rating outlook, where applicable, as negative, in line with the outlook on India's sovereign rating.
"The economic shock from the coronavirus pandemic will exacerbate an already material slowdown in India's economic growth, weakening borrowers' credit profiles and hurting Indian banks' asset quality. Prolonged financial stress among rural households, weak job creation and a credit crunch among non-bank financial companies will lead to a rise in non-performing loans, delaying the ongoing clean-up of bank's balance sheet over the past two years," the agency said in a statement on Tuesday.
Moody's Investor Service has downgraded Baseline Credit Assessment (BCA) of State Bank of India (SBI) to ba2 from ba1. The downgrade reflects ratings agency's view that SBI's asset quality and profitability will deteriorate on back of economic shock from the coronavirus pandemic in an already slowing economy.
Moody's has also downgraded SBI's foreign currency preferred stock non-cumulative MTN program rating to (P)B2 from (P)B1, and the rating of the preferred stock non-cumulative (Basel III compliant Additional Tier 1 securities) bond issued out of its DIFC branch to B2(hyb) from B1(hyb). Moody's has maintained SBI's rating outlook, where applicable, as negative, in line with the outlook on India's sovereign rating.
"The economic shock from the coronavirus pandemic will exacerbate an already material slowdown in India's economic growth, weakening borrowers' credit profiles and hurting Indian banks' asset quality. Prolonged financial stress among rural households, weak job creation and a credit crunch among non-bank financial companies will lead to a rise in non-performing loans, delaying the ongoing clean-up of bank's balance sheet over the past two years," the agency said in a statement on Tuesday.