Credit ratings and research giant, Moody’s on Friday, affirmed the Baa3 ratings on three Indian public sector banks including Bank of Baroda (BOB), Canara Bank, and Punjab National Bank (PNB), ANI reported.
The rating agency maintained A stable outlook on the long-term ratings of all three banks.
The ratings agency said in its press release that it was because of the three banks’ improved credit metrics.
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The banks’ non-performing loan (NPL) ratios have also declined. It is a ratio of bad or unpaid loans to total loans.
“Although their rapid growth of unsecured retail loans will pose risks to their asset quality, such loans represent a small share of their total loans. The banks have also built adequate loan loss reserves to buffer against future credit losses,” the rating agency said.
BOB’s, Canara’s and PNB’s NPL ratios respectively declined to 2.9 per cent, 4.2 per cent and 5.7 per cent as of 31 March 2024 from 3.8 per cent, 5.4 per cent and 8.7 per cent a year earlier, supported by lower bad loans (or slippage) as well as stronger recoveries and higher write-offs.
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“The banks’ strong liquidity buffers and low reliance on market funds support their funding,” Moody’s said.
Moody’s also believes that India’s strong operating environment will continue to support their credit fundamentals over the next 12-18 months, the ANI report read.
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