Fitch cuts viability ratings of Punjab National Bank, Bank of Baroda - NDTV

Mumbai: Global rating agency Fitch has cut viability ratings of state-run banks Punjab National Bank (PNB) and Bank of Baroda (BoB) by one notch to 'bb+' from 'bbb-' while retaining their long-term issuer default ratings at 'bbb-'. The viability rating is an indicator of a bank's credit-worthiness. Fitch said in a report 50 per cent of Bank of Baroda's loan book (both onshore and offshore loans) is foreign-currency denominated, which could be a greater source of instability to its credit profile given the recent currency volatility. While on downgrading India's second largest public-sector lender, PNB, the agency said, "BoB's stressed assets are equivalent to 85 per cent of equity. While this is a better buffer than PNB's, this is unlikely to be maintained given the level of deterioration that has taken place." "The downgrade to PNB's viability ratings reflects its already-weak equity position and the expected further weakening of its asset quality profile from current levels, which means the state-run lender would take longer to bounce back even under a cyclical recovery," Fitch said. The rating agency noted that PNB's stressed assets stood close to 15 per cent of its loans in FY13, compared to 11 per cent in the previous fiscal year (FY12), the highest among rated state-owned banks it rates. "Notwithstanding PNBs funding and profitability strength, we maintain a negative bias on the bank's viability ratings." BoB's gross NPLs have risen 84 per cent in April-June 2013 year-on-year, the report added. Fitch has downgraded Indian bank's long-term (LT) issuer default rating (IDR) to 'BB+' from 'BBB-' and its viability rating (VR) to 'bb+' from 'bbb-'. The agency has also affirmed long-term issuer default ratings of State Bank of India, Canara Bank, IDBI Bank, BoB New Zealand, ICICI Bank and Axis Bank at 'bbb-', and the viability ratings of SBI, ICICI Ban k and Axis Bank at 'bbb-', Canara Bank at 'bb+' and IDBI Bank at 'bb'. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGa9d87v9EPfwhY37Qbj4oCFythZw&url=http://profit.ndtv.com/news/industries/article-fitch-cuts-viability-ratings-of-punjab-national-bank-bank-of-baroda-327562

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