S&P cuts ratings of SBI, Union Bank

Published: 11th October 2012 12:32 PM  |   Last Updated: 11th October 2012 12:35 PM   |  A+A-

Close on the heels of Standard & Poor’s (S&P) warning of a potential downgrade of India’s sovereign credit rating, it has lowered the standalone credit profile of State Bank of India and of Union Bank of India.

While it has revised downwards the credit profile of SBI to ‘BBB-’ from ‘BBB’, it has cut Union Bank’s to ‘BB+’ from ‘BBB-’ based on anticipation of the banks’ weak asset quality performance.

“We revised the stand-alone credit profiles of SBI and UBI because we expect the banks’ asset quality to remain weak and credit costs to stay high. We expect SBI’s and UBI’s asset quality to remain stressed in the fiscal years ending March 31, 2013, and 2014, partly due to continued slippages in their restructured loan books,” S&P said.

As on June 30, SBI’s gross non-performing loan ratio on a stand-alone basis stood at 5%. This is the highest among the Indian banks that S&P rated, it said. On a stand-alone basis, the bank’s mid-corporate (NPL: 9.3%) and agriculture (NPL: 9.8%) portfolios are particularly stressed. According to S&P, non-performing loans in UBI’s agriculture portfolio have also surged. Moreover, the bank has asset concentration in its infrastructure portfolio, especially in the power sector, which is facing challenges.

The ratings firm, however, affirmed its ‘BBB-’ long-term and ‘A-3’ short-term issuer credit ratings on seven government-owned banks in India.  The outlook on all the long-term ratings is negative.


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp