Moody's maintains stable outlooks on three Indian public sector banks

Moody's Ratings affirmed the Baa3 ratings on Bank of Baroda (BOB), Canara Bank, and Punjab National Bank (PNB) with stable outlooks. Improved credit metrics and declining nonperforming loan (NPL) ratios were cited as reasons for the rating action. \r

Moody's expects India's favorable operating environment to continue supporting the banks' credit fundamentals in the next 12-18 months. Despite rapid growth in unsecured retail loans posing risks to asset quality, Moody's noted that such loans represent a small portion of their total loans. \r

However, an increase in funding costs may lead to profitability moderationBOB, PNB, and Canara Bank reported consolidated assets of Rs 16.5 trillion, Rs 16.0 trillion, and Rs 15.4 trillion, respectively, as of March 31, 2024.