State Bank of India

The stable outlook on SBI reflects that on the sovereign (India: BBB-/Stable/A-3). We expect the bank to maintain its market leadership in India's banking sector over the next two years. Its funding and liquidity will stay strong, supported by high customer confidence. SBI could maintain asset quality that is better than the sector average in India and comparable to similar rated international peers. The bank's capitalization is likely to stay weaker than that of India's private sector banks. We continue to factor in a very high likelihood of government support in our ratings. Our sovereign credit ratings on India cap the ratings on SBI. The ratings on the bank will therefore move in tandem with the sovereign ratings on India.

...State Bank of India (SBI) will maintain its market leadership. The bank is the largest in India with significant geographic and product diversity. India's robust economic growth supports its loan growth, asset quality, and profitability. The bank's strong deposit franchise also underpins its credit profile. Asset quality will likely be 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%-3.0% of total loans over the next 12-18 months, versus 2.3% as of Dec. 31, 2023. Credit costs will likely remain at less than 1%. SBI's capitalization remains weaker than that of peers. The bank's risk-adjusted capital (RAC) ratio could stay moderate at 6.0%-6.5% over the next two years, versus 6.3% as of March 31, 2023. Its capitalization remains lower than that of large private banks in India....

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