Union Bank of India’s LT FCR Outlook Revised to Negative Following Change in Sovereign Risk Assessment

Ref: IN017 20 PBK 00- 0 1 5 May 2020

Union Bank of India’s LT FCR Outlook Revised to Negative Following Change in Sovereign Risk Assessment

Capital Intelligence Ratings (CI Ratings or CI ) today announced that it has revised the Outlook on the Long-Term Foreign Currency Rating (LT FCR) of Union Bank of India (UB ) to Negative from Stable . This follows a change in CI R atings ’ in ternal assessment of the credit worthiness of the Indian sovereign , and reflects our expectation that India’s economy and public finances could deteriorate over the next 12 months due to the adverse financial impact of the coronavirus ( C ovid-19 ) pandemic. Moreover, a weaker operating environment could negatively impact the asset quality and profitability of the banking sector.

We forecast a slowing of GDP growth to 1.5% in FY21 (the financial year runs from 1 April 2020 to 31 March 2021 ) . Stimulus…