S&P Global Ratings has assigned UCO Bank an investment-grade ‘BBB’ long-term and ‘A-2’ short-term issuer credit rating, with a stable outlook. The ratings reflect a very high likelihood of extraordinary support from the government of India and the bank’s improving capitalization, funding, and liquidity. UCO Bank is expected to maintain good capitalization and a stable outlook over the next two years.
UCO Bank Secures Investment-Grade Ratings from S&P Global Ratings
S&P Global Ratings has announced the assignment of an investment-grade ‘BBB’ long-term issuer credit rating and an ‘A-2’ short-term issuer credit rating to UCO Bank. The outlook on the long-term rating has been set as stable. This assessment signifies a positive evaluation of the bank’s creditworthiness and future financial stability.
Key Rating Drivers
The ratings are underpinned by the expectation of a very high likelihood of extraordinary support from the government of India if needed. S&P Global Ratings views the bank’s standalone credit profile (SACP) as ‘bbb-‘. The bank’s credit quality is expected to be supported by sufficient capitalization, solid funding, and healthy liquidity over the next two years. The stable outlook reflects the view that UCO Bank will maintain its strong capitalization and funding and liquidity profile.
Bank’s Role and Financial Strengths
UCO Bank plays a very important role as a public sector bank in promoting financial inclusion in India. Its strong links with the government, including majority ownership and control, are key factors. The bank’s established franchise, solid deposit base supported by high customer confidence, and ample liquidity contribute to its creditworthiness. While profitability and asset quality currently lag industry averages, UCO Bank is expected to continue improving its risk management and asset quality.
Capitalization and Growth Prospects
UCO Bank is expected to maintain sufficient capitalization to support growth, with its risk-adjusted capital (RAC) ratio projected to climb above 10%. The bank plans to raise Indian rupee 27 billion of core equity capital. Credit growth is anticipated to be driven by retail, agriculture, and MSME segments. Overseas loans accounted for approximately 11.0% of total advances as of end-September 2026.
Outlook and Potential Downgrade Factors
The stable outlook on the long-term rating is based on the expectation of improved risk management, asset quality, and a sustained strong funding and liquidity profile over the next two years. A downgrade could occur if sovereign ratings on India are lowered or if the bank’s SACP is revised downwards, for instance, if the RAC ratio falls below 9.5% or the funding profile deteriorates significantly.
Source: BSE
