SBI’s bond issue receives an “AA+/Stable” rating from CRISIL

10 Jul 2023 , 12:50 PM

State Bank of India’s (SBI) projected Rs 10,000 crore Tier-1 bond issue (under Basel III) has received an ‘AA+/Stable’ rating from CRISIL Ratings.

Securities having a ‘AA’ grade are thought to have a high level of safety when it comes to prompt payment of debts. Credit risk is incredibly low with these products.

The SBI group will need to maintain sufficient buffers to enable expansion and meet capital requirements as per Basel III criteria because of the size of its operations, the agency said.

Considering Gol’s position as India’s largest public sector bank (PSB), CRISIL Ratings anticipates that it will continue to assist SBI’s capital needs.

Additionally, Gol owned 56.92% of the bank as of March 31, 2023, giving it the freedom to raise capital by reducing Gol’s ownership percentage.

The agency has reiterated its ‘AAA/Stable’ rating for the Bank’s Tier II Bonds (amounting to Rs 32,524 crore under Basel III) and fixed deposits (AAA/Stable). The ‘AA+/Stable’ Tier I Bonds (under Basel III), totaling Rs 51709.7 crore, were also reaffirmed.

The highest level of safety in terms of timely payment of debt is seen as being present in securities with a ‘AAA’ grade. These investments have the lowest credit risk.

The SBI group’s dominating market share in the Indian banking sector, its robust resource profile, and its adequate capitalization remain essential factors in the ratings, according to CRISIL.

The ratings also take into account the bank’s sustained, solid support from its majority owner, GoI, both on a regular basis and in times of need. The group’s average asset quality, according to the agency, partially offsets these advantages.

As of March 31, 2023, the SBI group had a domestic market share of 20% for advances and 24% for deposits, making it the dominant force in the Indian banking industry.

SBI had net advances and deposits of RS 32,67,902 crore and Rs 144,68,535 crore, respectively, on a consolidated basis as of March 31, 2023 (as opposed to Rs 27,94,076 crore and Rs 40,87,411 crore, respectively, as of March 31, 2022).

The agency noted that because the bank will continue to serve clients with various credit ratings and across various industries, the overall asset quality will probably stay average over the medium term.

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