Mumbai: Shares of State Bank of India took a beating on the bourses for the second consecutive session on Wednesday, losing more than 3 per cent in early trade after Moody's downgraded its rating of the bank's financial strength.
The stock, which settled with a loss of over 4 per cent on Tuesday, declined further by 3.09 per cent in morning trade on Wednesday to a 52-week low of Rs 1,731.40 on the Bombay Stock Exchange.
A similar trend was witnessed on the National Stock Exchange, where the stock, after opening on a weak note, declined by over 3.19 per cent to a 52-week low of Rs 1,730.10.
The stock ended with losses of 3.63 per cent at Rs 1,787.20 on Tuesday.
However, it managed to regain some of the lost ground and was trading 2,61 per cent lower at Rs 1,740 on the BSE and was down 2.69 per cent at Rs 1,739.05 on the NSE at 1059 hours.
Global credit ratings firm Moody's on Tuesday downgraded its guidance on SBI's financial strength by one notch to 'D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality.
As per Moody's, a 'D' rating suggest "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength".
Moody's cited a likely rise in the bank's non-performing assets in the near future as one of the reasons for the downgrade.
"The government has asked us to give a report on the reasons for the downgrade," SBI Chairman Pratip Chaudhuri told CNBC-TV18 in an interview.
The standalone rating for SBI's private sector peers, like ICICI Bank, HDFC Bank and Axis Bank, stands at 'C-'.
The ratings downgrade puts pressure on the government to infuse capital in the country's largest lender as soon as possible.
Comments
0 comment