S&P lowers Bank of India view to negative

Standard & Poor’s said it revised the outlook on Bank of India to negative from stable.

The agency also said it affirmed the BBB- long-term and A-3 short-term issuer credit ratings.

S&P also said it affirmed the BBB- long-term issue ratings on Bank of India’s outstanding senior unsecured notes and B+ long-term issue ratings on the bank’s Basel II compliant hybrid notes.

The agency also said it revised the outlook on Bank of India (New Zealand) Ltd. to negative from stable and affirmed its BBB- long-term and A-3 short-term issuer credit ratings.

The rating reflects Bank of India’s sound franchise and very high likelihood of support from the government of India, S&P said.

The ratings are one notch higher than the bank’s stand-alone credit profile of BB+ because of the expected government support if the bank comes under financial distress, the agency said.

The outlook revision reflects an expectation that the bank’s asset quality will continue to weaken over the next 12- to 18-months, further straining the bank’s capitalization and profitability, S&P said.

Bank of India’s credit costs are likely to remain high because of continued pressure on asset quality, given the tough operating conditions for the corporate sector in India, the agency added.

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