The state-run banks whose ratings have been downgraded are Bank of India, Central Bank of India, Corporation Bank, Dena Bank, IDBI Bank, Indian Overseas Bank, Syndicate Bank and Uco Bank.
Public sector banks (PSB) were under pressure in the early trade on Friday after credit rating agency Crisil downgraded eight PSBs following deterioration in their asset quality and also revised the outlook on five of them to negative.
The Nifty PSU Bank index was trading 0.75 per cent down at 2,278.70 (at 9.29 am). The state-run banks whose ratings have been downgraded are Bank of India, Central Bank of India, Corporation Bank, Dena Bank, IDBI Bank, Indian Overseas Bank, Syndicate Bank and Uco Bank. Andhra Bank, BoB, Canara Bank, Punjab National Bank and Punjab and Sind Bank are among banks whose outlook have been revised down.
Shares of Bank of India, Central Bank and Corporation Bank ended 0.32 per cent, 1.33 per cent and 2.73 down, respectively.
Dena Bank (0.70 per cent), IDBI Bank (down 1.44 per cent), Indian Overseas Bank (down 1.49 per cent) closed in red. Uco Bank closed flat at Rs 35.70.
Significant stress in the corporate loan book of public sector banks (PSBs) is expected to result in their weak assets ballooning to Rs 7.1 lakh crore by March 2017 (11.3 per cent of total loan book) from around Rs 4 lakh crore as of March 2015 (7.2 per cent of loan book). Steep rise in non-performing assets, expected further surge in stressed assets and the consequent hit on profitability and capital will dent credit profiles.
(With agency inputs)