State Bank shares drop 2% on Moody's downgrade

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 State Bank shares drop 2% on Moody's downgrade
State Bank of India: Quotes, News
BSE 254.40BSE Quote1.35 (0.53%)
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Shares in India's largest lender, State Bank of India dropped 2% in trade, following a downgrade by Credit ratings agency Moody's Investors Service Inc.

State Bank of India shares were last trading at Rs 1,626 on the National Stock Exchange.

Moody's has downgraded the State Bank of India's rating to Baa3 from Baa2, for the senior unsecured debt and local currency deposit, said the media report.

On the back of economic slowdown pressure on the credit quality of India's largest lender, the rating agency has also changed the outlook on its financial strength rating to 'negative' from stable, said the media report.

"The combination of increasing pressure on credit fundamentals and the ongoing reliance on the fiscally constrained Indian government to maintain capital at levels desired by the Indian regulators argue for the appropriateness of supported debt and deposit ratings at a level no higher than the sovereign," Moody's said in the media.

However, SBI has received Rs 10,900 crore of capital injections from the government in the last two years in order to boost its capital level.

Moreover, on the back of the fact that the bank's standalone credit profile continues to face negative pressures in the context of a slowdown of the Indian economy, the bank is likely to seek another capital injection from the Government at the end of the current fiscal year.

GoodReturns.in with inputs from Dion Global

Read more about: sbi, moody
Story first published: Tuesday, September 24, 2013, 10:29 [IST]
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