New Delhi, February 25 Fitch Ratings on Wednesday affirmed the ratings of two public sector banks – Punjab National Bank (PNB) and Bank of Baroda (BoB) at 'BBB-' with a stable outlook.
PNB and BoB's long-term Issuer Default Rating (IDR) reflects Fitch's expectation of a high probability of extraordinary state support for the bank, if required, the global rating agency said in two separate statements.
The government holds 70 per cent and 64 per cent in PNB and BoB, respectively.
PNB's large size and market share, and the assessment that the state has a strong propensity to support the banking system in general, supports its rating. The Stable Outlook on the IDR mirrors that on India's sovereign IDR.
"BOB's position as India's second-largest state bank and our assessment that the state has a strong propensity to support the banking system in general," Fitch said in a statement.
At the same time, Fitch has upgraded both PNB and BoB's Viability Rating (VR) to 'bb' from 'bb-', supported by improvements in the financial profile, including asset quality, capitalisation and profitability, which it expects to be sustained in an improving operating environment (OE).