ratings NS axis Bank, HDFC bank, on ICICI and Baa3, after sovereign rating action. Also, their rating outlook has been changed to Stable from negative.
This rating action is prompted by Moody’s’ recent confirmation of the Indian government’s Baa3 issuer rating and the change in outlook from negative to stable.
Moody’s also reaffirmed the long-term local and foreign currency deposit ratings of Bank of Baroda, Canara Bank, Punjab National Bank and Union Bank of India. Rating approach of these banks has also been changed from negative to stable.
“The confirmation of the deposit ratings of Axis, ICICI, HDFC Bank and SBI and the change in outlook to stable follows a change in outlook for stabilizing sovereign ratings,” Moody’s said in a statement. “Mel previous negative outlook on sovereign ratings removed negative
Outlook on these banks due to strong linkage with sovereign credit profile.
The rating agency highlighted that the confirmation of state-run banks reflects the fact that despite significant economic challenges since the start of the pandemic, their asset quality has deteriorated only marginally while capital has improved. .
“Corporate asset quality has improved as legacy issues have been resolved, while the decline in retail asset quality was relatively moderate,” the agency said. If economic activities continue to normalize, the asset quality will improve further.