Fitch Ratings on Wednesday revised its outlook for nine banks in India, including SBI, ICICI Bank and Axis Bank, from negative to stable.
Other lenders include – Bank of Baroda (BOB), Bank of Baroda (New Zealand) Limited, Bank of India, Canara Bank, Punjab National Bank (PNB) and Union Bank of India.
Fitch said in a statement,Fitch Ratings has revised the outlook on the long-term issuer default rating (IDR) of nine India-based banks from negative to stable, while reaffirming their IDRs.
The IDRs are based on Fitch’s assessment of the high to moderate likelihood of exceptional state support for these banks, taking into account the sovereign’s ability and propensity to provide exceptional support.
Fitch said this factors in the government’s consistent record of supporting systemically important banks, the relative systemic importance of lenders and their separate ownership.
Separately, Fitch also revised the outlook for the Export-Import Bank of India (EXIM) long-term IDRs from negative to stable.
These rating actions follow Fitch’s revision of outlook on India to ‘BBB-‘ rating, which has stabilized from negative last week due to less downside risk to the country’s medium-term growth, which is in line with its rapid economic recovery. and underpinned by mitigating financial sector vulnerabilities. ,
“The outlook revision reflects our view that India’s rapid economic recovery and financial sector vulnerabilities reduce the risk of a decline in medium-term growth,” Fitch said in a statement on June 10. ,
“We expect strong growth relative to peers to support credit metrics in line with current ratings,” the rating agency said.
Fitch expects India’s GDP to grow by 7.8 per cent in FY13, compared to an average forecast of 3.4 per cent for BBB rated countries.