InvestorQ : Why have Moody’s downgraded the ratings of State Bank of India?
Riya Dwivedi made post

Why have Moody’s downgraded the ratings of State Bank of India?

Answer
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shrinidhi Rajan answered.
4 weeks ago


You normally get to see contradictory views on a stock but SBI was stark on Tuesday. On a day when Goldman upped the target of SBI by 54%, Moody’s downgraded the baseline credit assessment of SBI by on notch to ba2 from ba1.

According to Moody’s, this lowering of the baseline assessment was driven by expectations that the profitability and asset quality of SBI would be severely impacted in the coming months. A bigger impact is expected once the EMI moratorium is withdrawn.

Moody’s reaffirmed the foreign currency deposit ratings of SBI at Baa3. Now this is at par with the sovereign ratings of India after the latest Moody’s downgrade two months back. Moody’s has also cautioned of stress on retail and MSME loan portfolio of SBI.

Moody’s has given a broad view on asset quality that is largely contradictory to the optimism that Goldman has expressed. Of course, Moody’s has a point but the things should be clearer in the next few months as the economy recovers.