Moody's Upgrades State Bank of India's Credit Assessment, Affirms Baa3 Deposit Ratings
Moody's Ratings has affirmed State Bank of India's (SBI) Baa3 long-term deposit ratings while upgrading its Baseline Credit Assessment (BCA) and Adjusted BCA to baa3 from ba1. The bank's Additional Tier 1 securities rating was upgraded to (P)Ba3 from (P)B1. The upgrade reflects improved capitalization and asset quality, with SBI's consolidated CET1 ratio rising to 11.1% and gross NPL ratio improving to 1.8%. SBI expects 12% loan growth and maintains a return on average assets of 1.1%. Moody's revised SBI's Governance Issuer Profile Score to G-2 from G-3. The bank recently raised ₹24,999.99 crore through a QIP, issuing shares at ₹817.00 each. Moody's maintains a stable outlook, citing SBI's strong market position and robust funding profile.

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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.
Historical Stock Returns for State Bank of India
1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
---|---|---|---|---|---|
-1.12% | -2.04% | +0.81% | +7.65% | -4.94% | +330.96% |