SBI’s deposit rating affirmed, PNB, BoB, Canara Bank upgraded: Moody’s

New Delhi. Rating agency Moody’s on Friday affirmed the long-term deposit ratings of State Bank of India (SBI) and upgraded deposit ratings of Punjab National Bank (PNB), Canara Bank and Bank of Baroda. Moody’s Investors Service said in a statement that the long-term rating outlook of all these public sector banks remains stable. Moody’s has retained SBI’s long-term local and foreign currency bank deposit ratings at Baa3, while the other three PSBs have upgraded their long-term deposit ratings.

Retaining the long-term deposit rating of SBI at Baa3 and upgrading the long-term deposit ratings of Bank of Baroda, Canara Bank and PNB from Baa1 to Baa3 reflect the improvement in India’s macroeconomic outlook, it said. This also reflects the perception of a very high level of government support to banks in times of need. Moody’s bank deposit ratings reflect a bank’s ability to service its foreign and domestic currency deposit obligations on time. Moody’s said credit conditions in India have gradually improved, with retail loans performing well and corporate financials improving.

However, small and medium-sized companies continue to pose a risk to the asset quality of banks. Moody’s said, “India’s economic growth will be affected by rising rates and the global recession but the Indian economy will outperform other emerging markets. These factors will keep the operating environment conducive for banks. The rating agency expects the asset quality of banks to remain good over the next one-and-a-half years, helped by a favorable operating environment and improving balance sheets of companies.

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