Shares of state-run banks today fell by up to 4 per cent 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.
IDBI Bank fell by 3.63 per cent, Corporation Bank lost 3 per cent, Dena Bank was down 2.62 per cent, Andhra Bank (2.44 per cent) and Bank of India (2.24 per cent) on BSE.
Shares of Indian Overseas Bank lost 2 per cent, Central Bank of India dipped 1.91 per cent, Syndicate Bank (1.89 per cent), Uco Bank (1.68 per cent), PNB (1.59 per cent) and Canara Bank (1.58 per cent).
The agency has placed the rating on Syndicate Bank on negative watch list.
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. Those whose outlooks have revised down are Andhra Bank, BoB, Canara Bank, PNB and Punjab and Sind Bank, Crisil said in a report yesterday.
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 trillion by March 2017 (11.3 per cent of total loan book) from around Rs 4 trillion as of March 2015 (7.2 per cent of loan book).
Steep rise in NPAs, expected further surge in stressed assets and the consequent hit on profitability and capital will dent credit profiles, Crisil said.
