State Bank of India

The stable outlook over the next 18 months reflects our expectation that SBI will remain the undisputed market leader in India's banking sector and will receive capital from the government, if needed. We believe the bank will be adversely affected by current economic headwinds, and have factored the impact into our capital forecasts. In our view, SBI's performance is better than the domestic system average, but it is toward the weaker end of international peers. The bank's funding and liquidity will stay strong, supported by high customer confidence. A downgrade is unlikely based on our view of a very high likelihood of support from the government of India. A lowering of SBI's stand-alone creditworthiness is also unlikely over the next

...State Bank of India (SBI) will sustain its market leadership amid economic strain. SBI is the largest bank in India and has significant geographic and product diversity within the country. Some of SBI's metrics may deteriorate amid economic strains related to the COVID-19 pandemic but we believe the bank will remain the undisputed market leader. The weak economic environment will weigh on SBI's loan growth, asset quality, and profitability in the fiscal year ending March 31, 2022. A strong deposit franchise should continue to support the bank's credit profile. SBI's funding and liquidity metrics are strong and the bank will potentially benefit from a "flight to quality" in a stress scenario. High customer confidence will underpin its solid retail deposit base. SBI's asset quality could deteriorate over the next 12-24 months. We forecast nonperforming loans (NPLs) will rise to almost 6.5% of total loans by end-fiscal 2022, from 5.1% at end-March 2021. Credit costs will stay elevated at 1.7%,...

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