Global rating agency Moody’s today affirmed ratings of nine
banks, including Bank of India, Punjab National Bank and Axis Bank, at
Baa3/Prime-3, and downgraded the ratings of Indian Overseas Bank and Central Bank of India to Ba3 from Ba1. Other banks whose rating was affirmed are Bank of Baroda, Canara Bank, Oriental Bank of Commerce, Syndicate Bank, Union Bank of India and ICICI Bank. “We continue to position the rated public sector banks in
the “very high” government support bucket, reflecting the systemic importance
of public sector banks in the country,” Moody’s said in a report.
For Axis Bank and ICICI Bank, the agency expects the pace of bad
loan formation to decline materially from the very high levels seen fiscal
2017, but to remain elevated. “Both banks remain exposed to weak corporates
that have not yet been classified as NPLs, thus representing a potential source
of asset quality stress,” the report said. The agency also downgraded IOB’s
Hong Kong branch’s senior unsecured debt rating to Ba3 from Ba1. Moody’s also
downgraded the standalone credit profile, or the baseline credit assessment, of
Syndicate Bank to Ba3 from Ba2, and as a result, downgraded its subordinated
MTN and junior subordinated MTN programme ratings to (P)Ba3 and (P)B1 from
(P)Ba2 and (P)Ba3, respectively.
It changed the outlook to stable from positive for BoB and its
London branch, Canara and its London branch, PNB, and Syndicate and its London
branch. The rating firm changed the outlook to negative from positive for BoI
and its London and Jersey branches, OBC, and Union Bank and its Hong Kong
branch, and changed the outlook to stable from negative for IOB and its Hong
Kong branch. The rating agency used the joint default analysis model to
determine government support for PSU banks. Under this model, it has placed
each bank in a support bucket, which can be “very high”, “high”, “moderate”, or
“low”.
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