Global rating agency Fitch on Friday affirmed ‘BBB—’ or investment grade with stable outlook to the country’s largest lender State Bank of India. The agency has also affirmed SBI’s Viability Rating (VR) at ‘bbb—’.

The ratings of SBI are driven by a high probability of support from the government, given its systemic importance as the largest bank in India, as the sole banker in many economically backward regions and as a banker to various government entities, Fitch said in a statement.

Notwithstanding the revenue strengths, internal capital generation has remained and is likely to remain under pressure, firstly due to increasing credit costs and secondly on account of pension costs, at the time of the next wage revision. The weakening operating environment means Fitch expects credit costs to increase and the level of non—performing loans to rise, it said.

The operational and data integrity risks associated with a large organisation have also been highlighted by the size and timely recognition of pension liabilities, it said.

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