SBI slips to 2-year low on Moody's Investors Service downgrade
Shares of State Bank of India plunged over 4% after Moody's Investors Service downgraded the country's largest public sector bank's financial strength rating (BFSR), to D from C- on account of asset quality concerns and capital situation.
According to the note, the non-performing assets (NPA) are likely to continue rising in the near term and higher interest rates and a slower economy might weigh on the SBI's profitability and its creditworthiness.
The SBI reported a Tier 1 capital ratio of 7.60% as of 30 June 2011 which is below the 8% Tier 1 ratio that the government of India has committed for maintaining in public sector banks (PSB).
The level pushes the bank into a lower rating band which might provide an insufficient cushion to support growth and to absorb potentially higher credit costs for more details....
According to the note, the non-performing assets (NPA) are likely to continue rising in the near term and higher interest rates and a slower economy might weigh on the SBI's profitability and its creditworthiness.
The SBI reported a Tier 1 capital ratio of 7.60% as of 30 June 2011 which is below the 8% Tier 1 ratio that the government of India has committed for maintaining in public sector banks (PSB).
The level pushes the bank into a lower rating band which might provide an insufficient cushion to support growth and to absorb potentially higher credit costs for more details....
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