Rating agency Fitch has downgraded the viability ratings (VRs) of State Bank of India (SBI) and Bank of Baroda (BoB).
Fitch downgraded the VRs of SBI and BoB by one-notch to ‘BB+’ and ‘BB’, respectively.
It cited the lenders’ weakened risk profile due to poor asset quality and the vulnerability of their capital buffers to moderate shocks.
As many as 19 of India’s 21 state banks reported losses in the last fiscal, cumulatively wiping out almost all of the government’s $ 13 billion capital injections during the year.
Fitch, which has a negative sector outlook on Indian banks, however, affirmed the ‘BBB’ Long-Term Issuer Default Ratings (IDRs) of SBI, BoB, Canara Bank and Bank of India (BoI) with a stable outlook.
BBB rating
A BBB rating reflects an opinion that the issuer has the current capacity to meet its debt obligations but faces more solvency risk than an A-rated issue and less than a BB-rated issue if business, financial, or economic conditions change measurably.