SBI downgrade will have negative impact on PSU banks: Sonam Udasi, IDBI Capital

In a chat with ET Now, Sonam Udasi, Head of Research, IDBI Capital, shares his view on the banking sector. Excerpts:

ET Now: Credit rating agency Moody's have downgraded the debt rating of the State Bank of India to Baa3 from Baa2. How much of an impact this is? How are you are going to be looking at an SBI, Bank of Baroda and PNB in-lieu of this downgrade?

Sonam Udasi: Our house call continues to be negative on the PSU banks despite the correction that we have seen recently.

We think that there is going to be more pain in the quarters ahead, the stressed assets. Hence, there is no clear view on when the stress asset situation will go away.

The discussions that we have had with most of the banks is that this is still two or three quarters away. Therefore, the detrimental impact on the book values it can have is to be seen. Also, most of the banks and financials institutions, at least this quarter, will report losses on the treasury book due to the yields fluctuation. That will be an overhang, especially for PSU banks. Hence, we are not constrictive on any of the PSU banks right now.