[sbinews] S&P rates SBI?s foreign currency 'BB' (Sify & Reuters)

  • From: "Rajendra S. Pai" <rspai9@xxxxxxxxx>
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Thu, 29 Apr 2004 20:14:27 -0700 (PDT)

S&P rates SBI?s foreign currency 'BB' 
(Sify & Reuters)  
Thursday, 29 April , 2004, 10:37 
Standard & Poor's Ratings Services said today it
assigned its 'BB' long-term foreign currency
counterparty credit ratings to India's largest
commercial bank, State Bank of India (SBI). 

The outlook is stable. 

SBI's short-term foreign currency counterparty credit
rating of 'B' is affirmed. 

At the same time, Standard & Poor's assigned its
'BB+/B' long-term and short-term local currency
counterparty credit ratings to SBI, with a negative

These ratings remain constrained by the sovereign
ratings on the Republic of India (foreign currency
BB/Stable/B; local currency BB+/Negative/B). 

The ratings on SBI acknowledge the bank's strong
business profile, underpinned by its position as
India's largest commercial bank. 

The bank's strategy and corporate vision to be the
leading financial services group in India is soundly
based, with assets of Rs 49,7750 crore (US$103.7
billion) for fiscal year ended March 2003, and a
market share of about 18% of domestic deposits, and
17% for advances. 

SBI's operating efficiency and management information
capabilities are expected to benefit from the upgrade
of its IT capabilities, which will support the bank's
focus on the consumer banking sector, and the
introduction of new products and services. 

SBI's financial profile remains satisfactory,
supported by its adequate asset quality and
capitalization position. SBI's gross nonperforming
assets are expected to edge up, after the 90-day
nonperforming asset classification standard came into
effect March 2004. 

This will, however, be mitigated by the bank's
accelerated loan-loss provisioning practice. Its
capitalization, as measured by adjusted common
equity-to-average assets ratio of 4.68% in fiscal
2003, improved from 4.43% in the previous fiscal year.
The bank's capital and financial flexibility is also
supported by its reasonable internal capital
generation, strong market position, and associated
importance to the stability of India's financial

SBI has the capacity to raise additional capital, if
required, given its majority government ownership
through the Reserve Bank of India. In addition, the
bank's absolute shareholders' fund base of Rs 22,520
crore provides a sound buffer against contingencies. 

The stable outlook reflects the likelihood that SBI
will maintain its overall sound business and financial
profile. Although there has been some pressure on the
bank's earnings margin in previous fiscal years, the
margin remains satisfactory. The margin is also
expected to stabilize, given the bank's strategy of
diversifying its loan portfolio into relatively
higher-yielding consumer loans, together with more
active liability management of its deposits, and the
retirement of its high-cost borrowings. 

R.S.Pai, Web Address: http://rspai.tripod.com

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