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Moody’s Affirms Ratings on PNB, BoB and Canara Bank, Check Ratings Here


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Moody’s Ratings (Moody’s) has affirmed the Baa3 ratings on three Indian public sector banks – Bank of Baroda (BOB), Canara Bank, and Punjab National Bank (PNB). The rating agency has maintained stable outlooks on the long-term ratings of all three banks.

Improved Credit Metrics and Strong Operating Environment

Moody’s explained in a press release that the rating action reflects the improved credit metrics of the three banks. Additionally, Moody’s believes that India’s strong operating environment will continue to support the credit fundamentals of these banks over the next 12-18 months.

Declining Nonperforming Loan Ratios and Strong Liquidity Buffers

The respective nonperforming loan (NPL) ratios of BOB, Canara Bank, and PNB have declined. BOB’s NPL ratio decreased from 3.8 percent to 2.9 percent, Canara Bank’s decreased from 5.4 percent to 4.2 percent, and PNB’s decreased from 8.7 percent to 5.7 percent. This improvement is attributed to lower bad loans, as well as stronger recoveries and higher write-offs.

Moody’s also highlighted that the banks’ improving profitability will support their capitalization despite strong loan growth and higher risk weight requirements for unsecured lending. Furthermore, the banks’ strong liquidity buffers and low reliance on market funds provide support for their funding.

Risks and Future Outlook

Moody’s acknowledges that the rapid growth of unsecured retail loans could pose risks to the banks’ asset quality. However, it is important to note that such loans represent a small share of their total loans. Additionally, the banks have built adequate loan loss reserves to buffer against future credit losses.

While the rating agency expects an increase in funding costs, it anticipates some moderation in the banks’ profitability over the next 12-18 months.

Bank Information

  • Bank of Baroda (BOB) is headquartered in Mumbai and reported consolidated assets of Rs 16.5 trillion (USD 197.8 billion) as of March 31, 2024.
  • Punjab National Bank (PNB) is headquartered in New Delhi and reported consolidated assets of Rs 16.0 trillion (USD 191.8 billion) as of March 31, 2024.
  • Canara Bank is headquartered in Bangalore and reported consolidated assets of Rs 15.4 trillion (USD 184.6 billion) as of March 31, 2024.

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