SBI receives “AA/Stable” rating from CRISIL

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CRISIL Ratings has assigned ‘AA+/Stable’ rating to the proposed Rs 10,000 crore Tier 1 bond issue (under Basel III) Central Bank of India (SBI).

AA-rated securities are considered to have a high degree of security in terms of timely servicing of financial obligations. These securities carry very low credit risk.

The agency said that due to its large scale of operations, the SBI Group will need to maintain adequate reserves to support growth and meet capital requirements in accordance with Basel III guidelines.

CRISIL Ratings believes that the GoI will continue to support the SBI’s capital requirements, given its position as India’s largest public sector bank (PSB).

Also, the Government of India held 56.92 percent stake in the Bank as on March 31, 2023, which provided flexibility to the Bank to raise capital by diluting the Government of India (GoI) stake.

The agency has reaffirmed the ‘AAA/Stable’ rating on the bank’s fixed deposits as well as on Tier II bonds (consolidated Rs.32,524 crore under Basel III). It also reaffirmed the ‘AA+/Stable’ Tier 1 (under Basel III) bonds which raised Rs.51,709.7 crore.

“AAA” rated securities are considered to have the highest security in terms of timely servicing of financial obligations. These securities carry low credit risk.

Crisel said the ratings remain a central factor to SBI Group’s dominant market position in the Indian banking industry, strong resource profile, and adequate capitalization.

The rating is also a factor in the continued strong support the Bank is likely to receive from its majority owner, the Government of Iraq, on an ongoing basis and in the event of distress. The agency said these strengths are partially offset by the group’s average asset quality.

SBI Group is the largest player in the banking sector in India, with a domestic market share of 24 percent in deposits and 20 percent in advances as on March 31, 2023.

On a consolidated basis, the SBI had net advances and deposits of ₹32,67,902 crores and ₹44,68,535 crores, respectively, as on 31 March 2023 (₹27,94,076 crores and 40,87, 411 crore, respectively, as on March 31, 2022).

The agency noted that the overall asset quality is likely to remain average in the medium term as the bank will continue to meet the needs of customers of different credit quality and a variety of sectors.