Moody's Upgrades State Bank of India's Credit Assessment, Affirms Baa3 Deposit Ratings

2 min read     Updated on 22 Jul 2025, 09:57 AM
scanxBy ScanX News Team
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Overview

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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*this image is generated using AI for illustrative purposes only.

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 Day5 Days1 Month6 Months1 Year5 Years
-1.12%-2.04%+0.81%+7.65%-4.94%+330.96%
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Moody's Upgrades State Bank of India's Credit Profile, Affirms Baa3 Deposit Ratings

1 min read     Updated on 22 Jul 2025, 09:40 AM
scanxBy ScanX News Team
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Overview

Moody's Ratings has upgraded State Bank of India's (SBI) Baseline Credit Assessment (BCA) and Adjusted BCA to baa3 from ba1, while affirming its Baa3 long-term deposit ratings. The upgrade reflects SBI's improved financial health, with expectations of enhanced capitalization over the next 12-18 months. SBI's consolidated CET1 ratio improved to 11.10% from 10.30%, and its gross NPL ratio decreased to 1.80% from 2.20%. The bank successfully raised ₹24,999.99 crore through a Qualified Institutions Placement, issuing shares at ₹817 each. SBI expects 12% loan growth for fiscal year 2026, in line with industry average. Moody's revised SBI's Governance Issuer Profile Score to G-2 from G-3, maintaining a stable outlook on its ratings.

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*this image is generated using AI for illustrative purposes only.

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. This upgrade reflects the bank's improved financial health and strategic positioning in the Indian banking sector.

Upgraded Credit Assessment

The rating agency's decision to upgrade SBI's BCA is driven by expectations of improved capitalization over the next 12-18 months. This improvement is anticipated to come from both internal capital generation and potential external capital raising efforts. The upgrade brings SBI's standalone credit profile in line with other similarly rated peers.

Key Financial Metrics

SBI's financial performance has shown notable improvements:

Metric March 2025 March 2022 Industry Average
Consolidated CET1 ratio 11.10% 10.30% -
Gross NPL ratio 1.80% 2.20% 2.30%
Return on average assets 1.10% - -

Growth and Asset Quality

SBI expects a 12% loan growth for the fiscal year 2026, aligning with the industry average. The bank's asset quality is expected to remain stable, with its corporate lending book skewed towards highly rated borrowers and its retail book having a large share of secured products like mortgages and auto loans.

Capital Raising Initiative

In a significant move to bolster its capital position, SBI has successfully raised ₹24,999.99 crore through a Qualified Institutions Placement (QIP). The bank issued 30,59,97,552 equity shares at ₹817 per share, including a premium of ₹816 per share. This capital infusion is expected to further strengthen SBI's balance sheet and support its growth plans.

Governance and Outlook

Moody's has revised SBI's Governance Issuer Profile Score to G-2 from G-3, citing the resilience of the bank's asset quality and improving capitalization as indicators of a more prudent financial strategy. The outlook on SBI's ratings remains stable.

Government Support

The rating agency continues to factor in a very high probability of government support for SBI, considering its status as the largest bank in India and its close relationship with the government, which held a 56.9% stake in the bank as of March 2025.

State Bank of India's upgraded credit assessment and successful capital raise underscore its strong position in the Indian banking sector and its improved financial health. The bank's focus on asset quality and capitalization is likely to support its growth trajectory in the coming fiscal year.

Historical Stock Returns for State Bank of India

1 Day5 Days1 Month6 Months1 Year5 Years
-1.12%-2.04%+0.81%+7.65%-4.94%+330.96%
State Bank of India
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like16
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