Infomerics Ratings stated that the rating continues to derive strength from sovereign ownership with continued support, adequate capitalisation, diversified loan book and improvement in earnings profile over the years.
However, the ratings are constrained by moderate asset quality albeit improving, moderate resource profile, relatively moderate size & geographically concentrated operations.
The credit rating agency expects outlook to remain stable on the expectations of continued support from the Government of India (GoI), growth in advances, healthy resource profile, comfortable capitalization levels and improvement in asset quality.
The agency further said that a substantial growth in advances and deposits, profitability, and capitalization levels of the bank and substantial improvement in asset quality.
However, any weakening of linkages with Government of India (GoI), any major increase in slippage leads to weakening of asset quality, thereby impacting the earnings profile or any material decline in overall capital adequacy ratios below the current level could lead to negative rating action.
Punjab and Sind Bank (PSB) is a mid-sized corporate-focused public sector bank based out of New Delhi that operates through a network of 1,584 branches as on 31 December 2024 with branch concentration in north India. The Government of India’s (GOI) shareholding in the bank stood at 98.25% as on 31 December 2024.