State Bank of India (SBI), India's largest lender, has received a significant boost to its credit profile as Moody's Ratings affirmed its Baa3 long-term deposit ratings while upgrading the bank's Baseline Credit Assessment (BCA) and Adjusted BCA to baa3 from ba1. This upgrade comes alongside SBI's successful completion of a Qualified Institutions Placement (QIP), raising ₹24,999.99 crore.

Credit Rating Upgrade

Moody's upgrade of SBI's BCA reflects expectations of improved capitalization through internal capital generation and potential external capital raising over the next 12-18 months. The rating agency also upgraded SBI's Additional Tier 1 securities rating to (P)Ba3 from (P)B1, maintaining a stable outlook.

Key Financial Metrics

SBI's financial health has shown notable improvement:

• Consolidated common equity tier 1 (CET1) ratio increased to 11.10% as of March 2025, up from 10.30% in March 2022.
• Gross non-performing loan (NPL) ratio improved to 1.80% as of March 2025, down from 2.20% the previous year.
• Return on average assets stood at 1.10% for the fiscal year ended March 2025.

Governance and Risk Management

Moody's revised SBI's Governance Issuer Profile Score to G-2 from G-3, citing resilient asset quality and improving capitalization. The bank's corporate lending book is skewed towards highly rated borrowers, while its retail book has a large share of secured products.

Successful Capital Raise

In a separate development, SBI announced the successful closure of its QIP, raising ₹24,999.99 crore. The details of the placement are as follows:

Impact on Share Capital

Following the QIP, SBI's issued equity share capital increased from ₹892.54 crore to ₹923.14 crore, while the paid-up equity share capital rose from ₹892.46 crore to ₹923.06 crore.

Market Position and Outlook

SBI maintains its position as the largest bank in India with a 23% deposit market share. The government held a 56.90% stake in the bank as of March 2025. Moody's expects SBI's asset quality to remain broadly stable, with the bank projecting a 12% loan growth for fiscal 2026.

As SBI continues to strengthen its financial position and market leadership, these developments are likely to bolster investor confidence and support the bank's growth strategies in the coming fiscal year.

Moody's Ratings has affirmed State Bank of India 's (SBI) Baa3 long-term deposit ratings while upgrading the bank's Baseline Credit Assessment (BCA) and Adjusted BCA to baa3 from ba1. The rating agency has also upgraded SBI's Additional Tier 1 securities rating to (P)Ba3 from (P)B1, maintaining a stable outlook on the ratings.

Improved Capitalization and Asset Quality

The upgrade of SBI's BCA reflects expectations of improved capitalization through internal capital generation and potential external capital raising over the next 12-18 months. SBI's consolidated common equity tier 1 (CET1) ratio has shown significant improvement, rising to 11.1% from 10.3%.

The bank's asset quality has also seen positive developments, with the gross non-performing loan (NPL) ratio improving to 1.8%, down from 2.2%. This figure compares favorably with the industry average of 2.3% for the same period.

Strong Financial Performance

SBI expects a 12% loan growth, indicating continued expansion in its lending activities. The bank's profitability remains robust, with a return on average assets of 1.1%.

Governance and Risk Management

Moody's has revised SBI's Governance Issuer Profile Score to G-2 from G-3, citing resilient asset quality and improving capitalization as indicators of a more prudent financial strategy. The overall Credit Impact Score remains at CIS-2.

Government Support and Market Position

The rating agency's assessment considers a very high probability of government support for SBI, given its status as the largest bank in India and its close relationship with the government. The government held a 56.9% stake in the bank.

Capital Raising Initiative

In a significant move to further strengthen its capital position, SBI has successfully completed a Qualified Institutions Placement (QIP) of equity shares. The bank raised ₹24,999.99 crore by issuing 30,59,97,552 equity shares at ₹817.00 per share. This capital infusion is expected to bolster SBI's balance sheet and support its growth plans.

Outlook

Moody's maintains a stable outlook on SBI's ratings, reflecting the bank's strong market position, improved asset quality, and robust funding profile. The rating agency expects SBI's profitability to moderate in the next couple of quarters due to policy rate cuts, although this impact may be partially offset by a gradual lowering of funding costs in the latter half of the fiscal year.

As India's largest bank, with a 23% deposit market share, SBI's funding and liquidity continue to be key strengths, underpinned by its extensive retail deposit base.

The upgraded ratings and positive outlook underscore SBI's resilience and its pivotal role in India's banking sector, positioning it well for future growth and stability in the evolving financial landscape.