Moody’s affirms ratings of 9 Indian banks, changes outlook to stable
ratings of Axis Bank, HDFC Bank, ICICI and at Baa3, following sovereign rating action. At the same time, their rating outlooks have been changed to stable from negative.
This rating action is driven by Moody’s recent affirmation of the Indian government’s Baa3 issuer rating and change in outlook to stable from negative.
Moody’s also affirmed the long-term local and foreign currency deposit ratings of Bank of Baroda, Canara Bank, Punjab National Bank and Union Bank of India. The rating outlooks of these banks has also been changed to stable from negative.
“The affirmation of Axis, ICICI, HDFC Bank and SBI’s deposit ratings and change in outlook to stable follows the change in outlook on the sovereign rating to stable,” Moody’s said in a statement. “The mail previous negative outlook on the sovereign rating drove the negative
outlook on these banks, because of strong linkages to the sovereign credit profile.”
The rating agency highlighted that the affirmation of state-run banks, reflect the fact that despite the significant economic challenges since the onset of the pandemic, their asset quality has only deteriorated modestly while capital has improved.
“Corporate asset quality has improved as legacy issues have been resolved while deterioration in retail asset quality was relatively moderate,” the agency said. Asset quality will further improve if economic activity continues to normalise.”