State Bank of India

The stable outlook on SBI reflects that on the sovereign. We expect the bank to maintain its market leadership in India's banking sector over the next two years. SBI's funding and liquidity will stay strong, supported by high customer confidence. The bank's asset quality should remain better than the Indian sector average and comparable with that of similar rated international peers. SBI's capitalization is likely to stay weaker than that for Indian private sector banks. We continue to factor in a very high likelihood of government support for SBI in our ratings. A downgrade of SBI is unlikely, in our view. Our assessment of SBI's stand-alone credit profile (SACP) will need to weaken by several notches for that to happen.

...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 2.5%-3.5% of total loans over the next 12-18 months, compared with 2.7% as of March 31, 2023. 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 remains weaker than peers'. The bank's risk-adjusted capital (RAC) ratio will stay moderate at 6.0%-6.5% over the next two years, compared with 6.3% as of March 31, 2023. SBI's...

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