Moody's Investors - Downgrade Few PSU banks - Angel Broking

Mr. Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking Ltd

"Moody's Investors Service on Friday downgraded the long-term local and foreign currency deposit ratings of Bank of Baroda, Bank of India, Canara Bank, and Union Bank of India to Ba1 from Baa3. The rating agency also downgraded Baseline Credit Assessments of all the four lenders to B1 from Ba3. Before the pandemic, PSU banks except for a few had asset quality issues and were reporting subdued ROE. Pandemic has further accentuated asset quality issues. We expect credit cost for FY21 to remain elevate considering low economic activity and higher slippages from the moratorium book. We believe Bank of Baroda and Canara bank stock price to consolidate till investors get better clarity on slippage from Morat book. We have a positive view on the State bank of Inia from PSU banks and currently, all PSU banks are trading at a historically low valuation."

Source : Equity Bulls

Keywords