State Bank of India

The stable outlook on SBI over the next 18 months reflects our expectation that the bank will maintain its market leadership in India's banking sector. SBI'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) will need to weaken by two notches for a downgrade, which we view as unlikely over the next 24 months. We could upgrade SBI if we raise our sovereign ratings on India over the

...State Bank of India (SBI) will maintain its market leadership. The bank is the largest in India and has significant geographic and product diversity within the country. India's robust economic growth supports SBI's loan growth, asset quality, and profitability. The bank's strong deposit franchise also underpins its credit profile. SBI's asset quality should stay stable over the next 12-18 months. We forecast the bank's weak loans (nonperforming loans [NPLs] and restructured loans) will stay at 3.0%-3.5% of total loans over the next 12-18 months, compared with 3.2% as of Dec. 31, 2022. Credit costs should remain at about 1% over our forecast period. Although higher inflation and interest rates are key credit risks, SBI will be able to absorb a moderate rise in credit stress, in our assessment. SBI's capitalization could weaken in the absence of additional common equity capital. The bank's risk-adjusted capital (RAC) ratio could dip below 5% by the end of fiscal 2024 (year ending March 31,...

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