Summary: Bank of India

Strong business position. Very high likelihood of government support because of state ownership. Moderate capitalization and earnings. Risk of a sharp rise in nonperforming loans. The stable outlook on Bank of India (BOI) reflects our expectation that the bank will maintain its current credit profile over the next 12 months. The ratings and outlook on the bank's New Zealand subsidiary Bank of India (New Zealand) Ltd. (BOI (New Zealand); BBB-/Stable/A-3) will move in tandem with those on BOI. We may downgrade BOI if the bank's pre-diversification risk-adjusted capital (RAC) ratio dips below 5%, possibly because the bank can't raise sufficient capital to support growth, its profitability continues to deteriorate, or India's economic risk rises. We could also downgrade BOI if

...Risk of a sharp rise in nonperforming loans. Outlook: Stable The stable outlook on Bank of India (BOI) reflects our expectation that the bank will maintain its current credit profile over the next 12 months. The ratings and outlook on the bank's New Zealand subsidiary Bank of India (New Zealand) Ltd. (BOI (New Zealand); ###-/Stable/A-3) will move in tandem with those on BOI. We may downgrade BOI if the bank's pre-diversification risk-adjusted capital (RAC) ratio dips below 5%, possibly because the bank can't raise sufficient capital to support growth, its profitability continues to deteriorate, or India's economic risk rises. We could also downgrade BOI if the bank's asset quality weakens significantly such that its gross non-performing loans increase to more than 10%-12% of total loans or stressed assets increase to 18%-20% of loans. The downside risks to the rating are much higher than the upside potential. We are unlikely to raise the rating on BOI because it would require a one-notch...

Summary