Stocks of PSU bank majors Punjab National Bank, Canara Bank and Bank of Baroda slipped about one per cent in early trade on Friday after Moody’s downgraded them to ‘negative’ from ‘stable’.
Canara Bank stock was trading at Rs 457.7, down 1.33 per cent, PNB declined 0.95 per cent at Rs 812 and BoB edged down 0.71 per cent at Rs 810.55.
“These Indian banks are particularly challenged by the prevailing operating environment, characterised by high inflation and high interest rates,’’ Moody’s said in a statement.
The revision in rating outlook, it said: “reflects the increased risk posed by current trends in asset quality, with continuing rise in gross non-performing loans and restructured loans pressuring profits and capital’’.
The prevailing economic conditions will reduce the repayment ability of some corporate borrowers and impact the banks, it said.
“Moody's analysis takes into account these bank’s comparatively low provisioning, exposing their capital buffers to the risk of erosion in the event that those difficult conditions persist,’’ the statement added.
Meanwhile, Bank Nifty was quoting 0.13 per cent higher while CNX PSU Bank index inched down by 0.13 per cent.