New Delhi [India], March 11 : Fitch Ratings has affirmed Punjab National Bank's (PNB) Long-Term Issuer Default Rating (IDR) at 'BBB-' and its outlook as 'Stable. '
Fitch has also upgraded the bank's Viability Rating (VR) to 'bb--' from 'b+' and affirmed the Government Support Rating (GSR) of 'B--'.
The rating agency said the upgrade of the state-owned lender PNB's viability rating by one notch to 'bb--' factors in ongoing improvements in PNB's risk profile, reflected in financial performance improvements that have surpassed Fitch's expectations and are likely to continue.
However, the rating agency said the risk profile remains a key consideration in our assessment of the bank's overall intrinsic credit profile, given its highly volatile past and vulnerability because of moderate buffers.
The rating agency asserted that India's growth will support Indian banks' ability to sustain profitable business in the medium term if risks are effectively managed.
The bank's risk profile has also improved, it said.
"We have revised PNB's risk profile score to 'b+' from 'b', reflecting its improved loan mix diversification, clean-up of legacy bad loans evident from its improving financial metrics, and limited unsecured retail exposure," the rating agency said.
The outlook for PNB's asset-quality score has been revised to positive from stable, as it expects the bank's impaired-loan ratio to fall further, with the four-year average declining below Fitch's 'bb' threshold of 5 per cent by 2026-27.
The bank's impaired-loan ratio fell to 4.1 per cent in the first nine months of 2024-25, from 5.7 per cent in 2023-24.
"The ratio remains above the industry average, but risks are better mitigated," Fitch said.
Punjab National Bank (PNB) is the second largest Public Sector Bank in India with a history of more than 125 years.
As of the end of September 2023, the Bank has a total of 51519 touch points with a network of 10092 domestic branches, 2 International branches, 12645 ATMs & 28782 Business Correspondents, as per PNB's website.