6 government banks rated BBB- with stable outlook by Fitch Ratings

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Fitch Ratings affirmed the long-term issuer default ratings of six public sector lenders in India at BBB- with stable outlook on Thursday. The banks are:

  1. State Bank of India (SBI)
  2. Bank of Baroda (BoB)
  3. Punjab National Bank (PNB)
  4. Canara Bank
  5. Bank of India
  6. Union Bank of India (UBI)

Fitch also affirmed the viability ratings of these banks at BB and their government support ratings at BBB-.

The rating agency said the ratings of the six banks are support-driven, with the government support rating (GSR) above the viability rating (VR). This reflects Fitch’s view that the Indian government is likely to provide extraordinary support to these banks if needed.

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SBI

Fitch revised the operating environment score of SBI to BB+ from BB, reflecting the view of structural improvement since the onset of Covid pandemic. The rating revision also reflects Fitch’s view of the bank’s ability to generate business consistently through the cycle while managing risk better than its peers.

Fitch also revised the outlook on SBI’s asset quality score of BB- to positive, from stable, as it expects the four-year average impaired loans ratio to further improve over the near term.

BOB

Fitch affirmed the long-term issuer default ratings of BoB and its wholly-owned subsidiary Bank of Baroda New Zealand at BBB- along with retaining the stable outlook for both.

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The rating agency also affirmed the viability rating (VR) of BoB at BB- along with affirming the government support rating at BBB- and the shareholder support rating at BBB-.

PNB

Fitch also affirmed the ratings of PNB, Canara Bank, UBI, and BI at BBB- with stable outlook along with retaining the viability rating at BB- and the government support rating at BBB-.

In addition, Fitch upgraded the viability rating of PNB to B+ even as it retained the outlook stable.

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The affirmation of the ratings of these six banks reflects Fitch’s view of their strong financial fundamentals, sound asset quality, and healthy capital buffers. The stable outlooks reflect Fitch’s expectation that the banks will maintain their strong financial performance in the near term.

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