Moody's downgrades Bank of Baroda's baseline credit assessment

Global rating agency Moody's Investor Service downgraded Bank of Baroda's (BoB) baseline credit assessment (BCA) and adjusted to ba3 from ba2.

Moody's Investors Service on Wednesday (4 March 2020) affirmed BoB's domestic and foreign bank (long term and short term deposit ratings of Baa3, stable/P-3.

At the same time, Moody's has downgraded BoB's Baseline Credit Assesment (BCA) and adjusted BCA to ba3 from ba2.

In addition, Moody's has downgraded BOB's Long term and short term Counterparty Risk Assessments to Baa3(cr)/P-3(cr) and the long term and short term domestic currency counterparty risk ratings (CRR) to Baa3/P-3 from Baa2(cr)/P-2(cr) and Baa2/P-2, respectively.

Moody's has also assigned a long term and short term foreign currency CRR of Baa3/P-3 to BoB. The outlook is stable.

Moody's said the downgrade reflects the weakening in asset quality and further downside risk from the deteriorating operating environment in India. Further deterioration in asset quality poses risks to BoB's profitability and capital, which would result in the bank's credit metrics converging with other rated Indian public sector banks with a BCA of ba3.

Shares of Bank of Baroda were trading 0.48% higher at Rs 73.65. The stock has tumbled nearly 16% in last one month as compared to a 7.2% fall in Nifty Bank index.

The Government of India held 71.60% in the state-run bank as on 31 December 2019.

Bank of Baroda reported a net loss of Rs 1406.95 crore in Q3 December 2019 as against net profit of Rs 471.25 crore in Q3 December 2018. Total income rose 49.58% to Rs 21,809.08 crore in Q3 December 2019 as against Rs 14,562.85 crore reported in Q3 December 2018.

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