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 improving financial health and strategic positioning in the Indian banking sector.

Key Highlights

• Moody's affirmed SBI's Baa3 long-term deposit ratings
• BCA and Adjusted BCA upgraded to baa3 from ba1
• Additional Tier 1 (AT1) securities rating upgraded to (P)Ba3 from (P)B1
• Outlook remains stable

Improved Capitalization and Asset Quality

The upgrade in SBI's BCA is driven by expectations of improved capitalization over the next 12-18 months. The bank's consolidated common equity tier 1 (CET1) ratio has shown significant improvement, rising to 11.10% as of March 2025 from 10.30% in March 2022.

SBI's asset quality has also demonstrated resilience, with the gross non-performing loan (NPL) ratio improving to 1.80% as of March 2025, down from 2.20% in the previous year. This performance surpasses the industry average of 2.30% for the same period.

Strong Financial Performance

The bank's financial metrics paint a picture of robust performance:

Government Support and Market Position

SBI's strong market position is underscored by its 23% deposit market share in India. The government's 56.90% stake in the bank as of March 2025 further reinforces the likelihood of support in case of financial distress.

Recent Capital Raising Initiative

In a significant move to bolster its capital base, SBI recently concluded a Qualified Institutions Placement (QIP). The bank successfully raised ₹24,999.99 crore by issuing 30,59,97,552 equity shares at ₹817 per share. This capital infusion is expected to further strengthen SBI's financial position 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 bank's resilient asset quality and improving capitalization as indicators of a more prudent financial strategy. The stable outlook on SBI's ratings reflects the bank's strong fundamentals and its crucial role in the Indian banking system.

As India's largest bank, with consolidated assets of ₹73.1 trillion as of March 2025, SBI's upgraded credit assessment underscores its pivotal position in the country's financial landscape. The bank's improved financial metrics and strategic initiatives position it well for sustainable growth in the evolving economic environment.

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.