Moody's Ups SBI's Baseline Credit Assessment To 'baa3'; Deposit Rating Affirmed At 'Baa3'

Moody's Ratings has upgraded State Bank of India’s baseline credit assessment to "baa3" from "ba1", citing expectations of improved capitalisation over the next 12–18 months through internal accruals and selective capital raising. The long-term deposit rating has been affirmed at "Baa3", in line with India’s sovereign rating.

The rating agency also upgraded the lender’s additional tier-1 securities preferred stock non-cumulative MTN programme rating to "(P)Ba3" from "(P)B1", and maintained a stable outlook across applicable instruments.

Moody's said SBI's large, diversified loan book and sound asset quality support its credit profile. It expects the bank to enhance its common equity tier-1 ratio with new equity raising and capital gains from stake sales in YES Bank.

Loan growth is projected at 12% in 2025-26, while near-term profitability could ease due to the lagged effect of recent rate cuts by the Reserve Bank of India. However, this impact may be partially offset by lower funding costs later in the fiscal year.