Fitch Ratings has affirmed State Bank of India’s (SBI) Long-Term Issuer Default Rating (IDR) at ‘BBB-‘ with a Stable Outlook. Concurrently, Fitch upgraded SBI’s Viability Rating (VR) to ‘bb+’ from ‘bb’. The Short-Term IDR was affirmed at F3, and the Government Support Rating (GSR) remains at ‘bbb-‘. These actions reflect improvements in SBI’s financial profile, including asset quality, capitalization, and profitability, supported by an improving operating environment in India.
Fitch Affirms Long-Term IDR and Upgrades Viability Rating
Fitch Ratings announced its review actions for State Bank of India (SBI) on March 2, 2026. The agency affirmed SBI’s Long-Term Issuer Default Rating (IDR) at ‘BBB-‘, maintaining a Stable Outlook. The Viability Rating (VR) saw a significant positive movement, being upgraded to ‘bb+’ from ‘bb’. Furthermore, the Government Support Rating (GSR) was affirmed at ‘bbb-‘, and the Short-Term IDR was affirmed at F3.
Key Drivers for Rating Action
The Long-Term IDR and GSR are equalized with India’s sovereign rating (BBB-/Stable), reflecting Fitch’s view of the highest probability of extraordinary state support for SBI, given its position as the country’s largest bank and 55.5% state ownership.
Viability Rating (VR) Upgrade Rationale
The VR upgrade to ‘bb+’ is driven by tangible improvements in SBI’s financial health:
- Asset Quality: The impaired-loan ratio improved to 1.6% in 9MFY26, with Fitch revising the asset-quality score to ‘bb+’. Loan loss coverage stood steady at 76%.
- Capitalization: The Common Equity Tier 1 (CET1) ratio rose to 12.6% in 9MFY26, supported by internal accruals and fresh equity raised in mid-2025. Fitch expects this to settle above 12% in FY27.
- Profitability: Operating profit/risk-weighted asset ratio is expected to remain steady around 2.5% through FY27, consistent with a mid ‘bb’ factor score.
- Funding: Deposits remain a strength, comprising 90% of total funding, supported by robust liquidity metrics (LCR at 138%).
Operating Environment (OE) Improvement
Fitch recently revised the outlook on the Indian banking sector’s Operating Environment (OE) score to positive from stable. This reflects expectations of reduced sector risks due to enhanced regulations and supervision by the Reserve Bank of India. This positive OE outlook suggests potential for future score revisions if improvements are sustained.
Debt Rating Actions Summary
Fitch also adjusted ratings linked to the bank’s intrinsic strength (xgs ratings):
- Long-term IDR (xgs) was upgraded to BB+(xgs) from BB(xgs).
- Senior unsecured long-term ratings (xgs) were also upgraded in tandem with the VR upgrade.
Rating Sensitivities
A negative action on the Long-Term IDR and GSR would occur if sovereign support prospects weaken, mirroring any downgrade to India’s sovereign rating. A positive action on the IDR/GSR is dependent on a corresponding change in the sovereign rating. A VR upgrade is possible if the bank’s OE score is revised to ‘bbb-‘, contingent on maintaining current financial performance.
Source: BSE
