New Delhi: S&P Global Ratings has assigned a ‘BBB’ long-term credit rating to Bank of India (BoI), citing the public sector lender's adequate capitalisation, strong funding profile and healthy liquidity position.
The US-based rating agency also assigned an ‘A-2’ short-term issuer credit rating to Bank of India, while maintaining a stable outlook on the long-term rating.
A ‘BBB’ rating indicates that an institution has adequate capacity to meet its financial commitments.
Government Support Strengthens Rating
S&P said Bank of India's rating also factors in the likelihood of extraordinary support from the Indian government if required.
The long-term rating is one notch above S&P's assessment of the bank's stand-alone credit profile.
The agency highlighted BoI's important role as a public sector bank in promoting financial inclusion by expanding access to deposits and credit.
It also pointed to the government's majority ownership and control of the lender as evidence of strong links between the two.
Stable Outlook for Next Two Years
S&P expects Bank of India to maintain adequate capital, strong funding and healthy liquidity over the next two years.
A solid deposit franchise, supported by high customer confidence linked to government ownership, and ample liquidity underpin the lender's creditworthiness, the rating agency said.
However, S&P flagged profitability and asset quality as areas where Bank of India continues to lag industry averages.
The agency expects the lender to improve its risk management and asset quality over the next two years.
Bank of India's capital position is also expected to remain sufficient to support credit growth above the banking industry average, providing further support to its credit profile.
