S&P Assigns ‘BBB’ Credit Rating to Bank of Maharashtra, Highlighting Growing Stability

 

On 24 September, S&P Global Ratings assigned a ‘BBB’ long-term and ‘A-2’ short-term credit rating to Bank of Maharashtra (BOM), signaling increased confidence in the lender’s stability and appeal to investors.

 

According to S&P, the ratings reflect “extraordinary support” from the Government of India if required. The long-term rating is one notch above the bank’s stand-alone credit profile (SACP) of ‘bbb-’, indicating a very high likelihood that the government would provide timely and sufficient support in the event of financial distress.

 

The ratings underscore BOM’s ability to meet its financial obligations and signal to investors and depositors that the bank is considered stable with a positive outlook. The short-term ‘A-2’ rating reinforces the view that the bank can comfortably handle immediate financial commitments.

 

Growth and Capital Expectations

S&P projects loan growth of 14%-15% over the next two years, with the risk-adjusted capital (RAC) ratio expected to strengthen to around 10.5%-11% from 10% as of 31 March 2025, despite the high loan growth rate. The rating takes into account the economic risk score of ‘5’ and India’s ‘BBB’ sovereign rating.

 

Upside and Downside Scenarios

The agency noted potential downside risks, including a possible downgrade if India’s sovereign rating falls or if BOM’s SACP is revised downward. Specifically, the SACP could be lowered if the RAC ratio drops sustainably below 10%, potentially due to rapid credit growth not backed by timely capital increases.

 

While S&P indicated that an upgrade is unlikely in the next two years, a future improvement is possible if India’s sovereign rating rises and BOM’s SACP is revised upward.