New Delhi [India], March 11 : Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of Union Bank of India at 'BBB-' and its outlook as 'Stable'.
Fitch has also upgraded Union's Viability Rating (VR) to 'bb-' from 'b+', and affirmed its Government Support Rating (GSR) of 'bbb-'.
"The VR (viability rating) upgrade to 'bb-' is supported by ongoing improvements in Union's risk profile, which are also reflected in its financial performance in recent years," Fitch said in a statement Tuesday.
Fitch said growth in Indian economy will support Indian banks' ability to sustain profitable business in the medium term, if risks are effectively managed.
"Union's business profile score reflects its large franchise as India's fifth-largest state bank. However, its risk appetite has weighed on its traditional business model, partly due to government influence, similar to other state banks, and led to high earnings volatility in the previous cycle although this has eased in recent years," Fitch added.
Fitch has revised Union's risk profile score to 'b+', from 'b'.
"This reflects positive developments such as greater loan diversification, reduced corporate loan risk, and limited exposure to unsecured retail loans, as well as its improving financial metrics," the global rating agency said in the statement.
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-'.
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