Strong earnings Healthy asset quality Lowest costs and stable funding base Strong capitalization Solid retail and corporate franchises Operates entirely in a developing environment and exposed to sovereign risk The rating on HDFC Bank takes into account the bank's strong earnings, led by low funding costs and a solid franchise, robust asset quality, and strong capitalization. The rating is constrained by the operating environment in India, where the bank has its predominant operations. Standard&Poor's tends not to rate banks above the sovereign rating on India (BBB-/Stable/A-3) because of the direct and indirect influence that a sovereign in distress would have on a bank's operations, including its ability to service foreign-currency obligations. HDFC Bank is a mid-sized bank in
