CRISIL Ratings has assigned ‘AA+/Stable’ rating to the proposed ₹10,000 crore Tier-I bonds (under Basel III) issue of State Bank of India (SBI).
Securities with ”AA” rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such securities carry very low credit risk.
Given its large scale of operations, the SBI group will need to maintain adequate buffers to support growth and meet capital requirement as per Basel III guidelines, the agency said.
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CRISIL Ratings believes GoI will continue to support SBI’s capital requirement, considering its stature as India’s largest public sector bank (PSB).
Also, GoI held 56.92 per cent stake in the bank as on March 31, 2023, providing flexibility to the bank to raise capital by diluting Government of India’s (GoI) stake.
The agency has reaffirmed ‘AAA/Stable’ rating on the Bank’s fixed deposits as well as on the Tier II Bonds (aggregating ₹32,524 crore under Basel III). It also reaffirmed the ‘AA+/Stable’Tier I Bonds (under Basel III) aggregating ₹51709.7 crore.
Securities with “AAA” rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such securities carry lowest credit risk.
CRISIL said the ratings continue to centrally factor in the SBI group’s dominant market position in the Indian banking industry, strong resource profile and adequate capitalisation.
The ratings also factor in the continued strong support that the bank is likely to receive from its majority owner, GoI, both on an ongoing basis and in the event of distress. These strengths are partially offset by the average asset quality of the group, the agency said.
The SBI group is the largest player in the banking sector in India, with domestic market share of 24 per cent in deposits and 20 per cent in advances as on March 31, 2023.
On consolidated basis, SBI had net advances and deposits of ₹32,67,902 crore and ₹44,68,535 crore, respectively, as on March 31, 2023 (₹27,94,076 crore and ₹40,87,411 crore, respectively, as on March 31, 2022).
The agency observed that overall asset quality will likely remain average over the medium term as the bank will continue to cater to customers of varying credit quality and to a variety of sectors.