State-run banks fall up to 3% as Crisil downgrades 8 PSBs

Shares of state-owned banks Friday fell by up to 3% after rating agency Crisil downgraded eight public sector banks following deterioration in their asset quality and also revised the outlook on five of them to negative.

Corporation Bank slipped 2.73%, Andhra Bank dipped 1.60%,  Indian Overseas Bank (1.49%), IDBI Bank (1.44%) and Central Bank of India (1.33%).

Similarly, shares of Dena Bank were down 0.70% and Bank of India fell by 0.32% on BSE.

The agency has placed Syndicate Bank on negative watch-list.

The state-run banks whose ratings have been downgraded are Bank of India, Central Bank of India, Corporation Bank, Dena Bank, IDBI Bank, Indian Overseas Bank, Syndicate Bank and Uco Bank.

Those whose outlooks have revised downwards are Andhra Bank, BoB, Canara Bank, PNB and Punjab and Sind Bank, Crisil said in a report Thursday.

Significant stress in the corporate loan book of PSBs are expected to result in their weak assets ballooning to Rs 7.1 trillion by March 2017 (11.3% of total loan book) from around Rs 4 trillion as of March 2015 (7.2% of loan book).

Steep rise in non-performing assets, expected further surge in stressed assets and the consequent hit on profitability and capital will dent credit profiles, Crisil said.

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