Moody's Ratings has confirmed the ratings for both State Bank of India and HDFC Bank, with a stable outlook on strong asset quality. According to reports from The Economic Times, Banking Standard, and Mint, the agency affirmed 'Baa3' long-term deposit ratings and 'baa3' Baseline Credit Assessment (BCA) and adjusted BCA for both banks. The stable outlook reflects the banks' robust asset quality metrics and operational strengths, with the ratings incorporating strong asset quality, healthy profitability and solid capital buffers across both institutions. Moody's cited diversified portfolios and low credit costs as key factors supporting the affirmations.
As reported by The Economic Times, Banking Standard, and Mint, SBI's ratings affirmation with a stable outlook reflects the bank's large and diversified lending portfolio with stable asset quality. The bank's profitability is supported by stable net interest margins, diversified non-interest income and low credit costs. SBI's dominant domestic franchise provides access to a large base of low-cost deposits, while its holdings of liquid government securities support strong funding and liquidity. Moody's expects SBI's asset quality to remain broadly stable, supported by resilient domestic demand and strong credit growth, though some moderation is likely in select segments including agriculture and MSME lending, following rapid credit expansion, and credit costs are expected to increase modestly from historical lows. The bank's liquidity coverage ratio of 124.3% as of the quarter ended March 2026 remains well above the regulatory minimum requirement, with Moody's expecting SBI to maintain adequate liquidity buffers.
According to The Economic Times, Banking Standard, and Mint, HDFC Bank's ratings affirmation with a stable outlook reflects the bank's strong and consistent asset quality, profitability and capital levels. The bank's profitability is supported by strong net interest margins, diversified non-interest income and low credit costs. HDFC Bank's capital position is strong, supported by internal capital generation and access to equity markets for capital needs. The ratings also incorporate the bank's strong retail franchise, which provides access to a large base of low-cost deposits, as well as its holdings of liquid government securities that support its funding and liquidity. Moody's expects HDFC Bank to maintain adequate capital buffers to support credit growth, though the agency noted that profitability for HDFC Bank is expected to moderate slightly over the next 12-18 months, reflecting lower non-interest income, particularly from treasury operations, while net interest margins remain broadly stable.
Since the beginning of the year, market performance for both banks has shown contrasting trends. HDFC Bank shares have tumbled over 18%, with its market capitalisation standing at ₹6.20 lakh crore. Meanwhile, SBI has demonstrated stronger performance, with a market capitalisation of ₹9.37 lakh crore and a 3% jump since the beginning of 2026. The rating affirmations come at a time when the corporate sector remains healthy with low leverage and strong profitability, which continues to support overall asset quality for both banks. Moody's forecasts that asset quality for both banks will remain stable moving forward, with the agency noting that credit costs are expected to increase modestly from historical lows for SBI, while HDFC Bank is expected to maintain adequate capital buffers to support credit growth.
