The rating agency, however, expects non-performing loans to rise this financial year
Fitch Ratings has revised the outlook of ten banks and financial institutions to ‘stable’ from ‘negative’. This is despite the fact that the rating agency expects non-performing loans (NPLs) and restructured assets to continue to rise in the financial year ending March 2014.
The banks and financial institutions include State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB), Bank of Baroda (New Zealand) Limited (BOBNZ), Canara Bank (Canara), IDBI Bank Ltd. (IDBI), ICICI Bank Ltd. (ICICI), Axis Bank (Axis), Export-Import Bank of India (EXIM), and Housing and Urban Development Corporation Ltd. (HUDCO).
The international rating agency has also affirmed their 'BBB-' long-term [Issuer Default Ratings (IDRs)].
“The change in the outlook on the IDRs follows the revision of the outlook on India's long-term foreign- and local-currency IDRs to stable from negative,” said Fitch Ratings in a press release on Friday.
The revision in outlook for SBI, ICICI, BoB, PNB, Canara, IDBI, EXIM and HUDCO, in line with the sovereign rating change, is primarily driven by a strong propensity and ability to support the banks if needed.
SBI, ICICI, PNB, BOB, Canara and IDBI are large domestic banks with a pan-India franchise and have a significant share of the system’s assets and deposits. BOBNZ's rating is aligned with that of its parent BOB.
However, Fitch Ratings said that it expects non-performing loans (NPLs) and restructured assets to continue to rise in the financial year ending March 2014. Government banks' stressed assets were at 11.59 per cent as of end-2012 against the sector average of 9.61 per cent.