Moody's Affirms State Bank of India's Long-Term Deposit Ratings, Upgrades Baseline Credit Assessment

Strategic Insights -

State Bank of India, the largest bank in India, has received a positive rating update from Moody's Investors Service. The rating agency has affirmed the bank's Baa3 long-term deposit ratings and upgraded its Baseline Credit Assessment (BCA) to baa3 from ba1. This upgrade reflects the bank's improving internal capital generation, access to low-cost deposits, and its diversified lending franchise with sound asset quality.

The rating affirmation is based on the bank's large and diversified lending franchise, sound asset quality, and sufficient holdings of liquid government securities. SBI's strongest retail franchise amongst Indian banks, access to low-cost deposits, and sufficient holdings of liquid government securities support its funding and liquidity. The bank's consolidated common equity tier 1 ratio (CET1) improved to 11.1% as of March 2025 from 10.3% as of March 2022, driven by internal capital generation and a capital raise.

Key Takeaways:

  • SBI's long-term deposit ratings have been affirmed at Baa3 with a stable outlook.
  • The bank's Baseline Credit Assessment (BCA) has been upgraded to baa3 from ba1, driven by improving internal capital generation and access to low-cost deposits.
  • SBI's consolidated common equity tier 1 ratio (CET1) improved to 11.1% as of March 2025 from 10.3% as of March 2022.
  • The bank's loans are expected to grow by 12% in fiscal year 2026, in line with the industry average.
  • SBI's asset quality is expected to remain stable, with a modest uptick in credit costs from cyclically low levels.
  • The bank's corporate lending book is skewed towards highly rated borrowers, and its retail book has a large share of secured products like mortgages and auto loans.
  • SBI's gross nonperforming loan (NPL) ratio improved to 1.8% as of March 2025 from 2.2% as of March 2024.

Statistics:

  • SBI's consolidated assets: INR73.1 trillion as of March 2025.
  • Consolidated common equity tier 1 ratio (CET1): 11.1% as of March 2025.
  • Bank's loans growth: 12% in fiscal year 2026.
  • Gross nonperforming loan (NPL) ratio: 1.8% as of March 2025.
  • SBI's government support assessment: Very high probability of government support in the event of financial distress.

Sources:

  • Moody's Ratings (Moody's)
  • State Bank of India's annual report (2025)
  • Moody's rating methodology: Banks, published in November 2024.