Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmedState Bank of India’s (SBI) foreign currency ratings at BBB- long-term and A3 short-term with a Stableoutlook. These ratings are the same as those assigned to the Indian sovereign. The support rating of 2is maintained. Official support is very likely in case of need particularly in view of the Bank’s majoritygovernment ownership and its systemic importance (it is the largest commercial bank in the country anda major banker to the government). The financial strength rating is affirmed at BBB reflecting theBank’s dominant position in the Indian financial sector, its extensive overseas operations, good seniormanagement team and moderately good financials overall. However, the outlook for the financialstrength rating is Negative since earnings may be strained in the current financial year due to a possibleincrease in non-performing loans and tighter central bank provisioning norms. The major factorsconstraining the ratings were SBI’s low loan-loss provision coverage ratio and the challenging operatingenvironment in the country.SBI performed well in FY2009 on the back of strong growth in net interest and non-interest income.The return on average assets and the operating profit to average total assets ratio improved during theyear. However, the two ratios weakened in H1 of FY2010 due to the modest growth in net interest, asubstantial increase in the net provision charge and higher operating costs. SBI remains adequatelycapitalised and its ratio of unprovided NPLs to free capital was reasonably low. Liquidity ratios remainstrong; the Bank has built a large customer deposit base through its vast network of branches and otheroffices.With total assets of USD189 billion at end March 2009, SBI is the largest commercial bank in India. TheBank and its banking subsidiaries together control a quarter of the banking assets in the country. TheBank operates a domestic network of more than 11,400 branches and over 8,500 ATMs. SBI’s profitableand growing foreign operations are spread over 92 offices in 32 countries across the globe. It is thelargest foreign exchange dealer in India and a market-maker in many currencies. It is the principalbanker to the government, acts as an agent of the RBI and handles around two-thirds of governmentrelated business in the country. SBI’s corporate and retail banking businesses service over 90 millioncustomers.