Moody’s affirms Baa3 ratings for HDFC Bank, SBI with stable outlook; check 2026 stock performance

Shares of State Bank of India (SBI) and HDFC Bank are likely to remain on investors’ radar after Moody’s Ratings affirmed the lenders’ ratings with a stable outlook, citing strong asset quality on Tuesday, July 14.

Moody’s Ratings affirmed the Baa3 long-term deposit ratings of both SBI and HDFC Bank, along with their baa3 Baseline Credit Assessment (BCA) and Adjusted BCA.

“SBI's ratings affirmation with a stable outlook reflects the bank's large and diversified lending portfolio with stable asset quality. The ratings also incorporate SBI's dominant domestic franchise, which provides access to a large base of low-cost deposits, as well as its holdings of liquid government securities that support strong funding and liquidity,” Moody’s Ratings said in a statement.

Moody’s said HDFC Bank’s ratings affirmation with a stable outlook reflects its strong and consistent asset quality, profitability and capital levels, while also factoring in its robust retail franchise that provides access to a large base of low-cost deposits, along with holdings of liquid government securities that support funding and liquidity.

Comment on asset quality

Moody’s said it expects State Bank of India’s asset quality to remain broadly stable, supported by resilient domestic demand and strong credit growth. However, it flagged the likelihood of some moderation in select segments, including agriculture and micro, small and medium enterprise (MSME) lending, following a phase of rapid credit expansion.

Furthermore, HDFC Bank’s asset quality is expected to remain broadly stable, supported by resilient domestic demand and strong credit growth, according to Moody’s. However, some moderation may be seen in select segments, including agriculture and MSME, following a period of rapid credit expansion.

Credit costs are likely to rise modestly from historical lows, the agency noted. It also highlighted that the corporate sector remains healthy, with low leverage and strong profitability, which continues to support overall asset quality.

On profitability

On profitability for HDFC Bank, Moody’s Ratings said they expect it to moderate slightly over the next 12–18 months, reflecting lower non-interest income, particularly from treasury operations, while net interest margins remain broadly stable.

“We expect SBI to maintain good capital buffers to support credit growth.  SBI's liquidity coverage ratio of 124.3% as of the quarter ended March 2026 remains well above the regulatory minimum requirement, and we expect the bank to maintain adequate liquidity buffers,” said Moody’s Ratings.

SBI, HDFC Bank share price trends

Since the beginning of the year, HDFC Bank shares have tumbled over 18%, and its market capitalisation stands at ₹6.20 lakh crore.

Meanwhile, SBI, with a market capitalisation of ₹9.37 lakh crore, has jumped 3% so far since the beginning of 2026.