State Bank of India

The stable outlook on SBI over the next 18 months reflects our expectation that SBI will maintain its market leadership in India's banking sector. The bank's funding and liquidity will stay strong, supported by high customer confidence. We expect asset quality to remain better than the Indian sector average and comparable to that of similarly rated international peers. A downgrade is unlikely, based on our view of a very high likelihood of support from the government of India. Our assessment of SBI's stand-alone credit profile (SACP) needs to weaken by two notches for a downgrade, which we view as unlikely over the next 24 months. We could raise the ratings on SBI if we raise our sovereign ratings on India

...State Bank of India (SBI) will maintain its market leadership. SBI is the largest bank in India and has significant geographic and product diversity within the country. The bank's loan growth, asset quality, and profitability should improve amid robust economic growth. A strong deposit franchise should continue to support the bank's credit profile. SBI's asset quality will likely improve further. India's robust economic growth and recovery from the pandemic should support borrowers' creditworthiness. We forecast SBI's weak loans (nonperforming loans [NPLs] and restructured loans) will decline to 3.0%-3.5% of total loans over the next 12-18 months, from about 4.8% as of June 30, 2022. The bank holds adequate provisioning of 70% for weak loans. Credit costs should remain at about 1% over our forecast period. Although higher inflation and interest rates are key credit risks, the bank will be able to absorb a moderate rise in credit stress, in our assessment. SBI's capitalization could weaken...

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