Fitch Upgrades Union Bank's Viability Rating Amid Robust Financial Performance

Fitch Ratings affirms Union Bank of India's Long-Term IDR at 'BBB-' with a stable outlook. The Viability Rating was upgraded to 'bb-', citing risk profile improvements. Union, India's fifth-largest state bank, has benefited from better loan diversification and financial metrics. PNB's ratings also hold steady.

In a recent announcement, Fitch Ratings has maintained the Long-Term Issuer Default Rating (IDR) for Union Bank of India at 'BBB-', with a positive outlook marked as 'Stable'. The agency also upgraded Union's Viability Rating from 'b+' to 'bb-', highlighting significant enhancements in its risk profile.

Fitch credited the upgrade to ongoing improvements in Union's financial performance, further buoyed by India's growing economy, which bolsters banks' ability for sustainable profit generation, provided risks are effectively managed. Union's vast franchise as India's fifth-largest state bank reflects its business prowess, though government influence has previously contributed to earnings volatility.

The enhancements in Union's risk score - now at 'b+' - stem from increased loan diversification, minimized corporate loan risks, and reduced exposure to unsecured retail loans. Parallel affirmations were made for Punjab National Bank, maintaining its IDR at 'BBB-' and a stable outlook, while its Viability Rating was elevated to 'bb--'.

(With inputs from agencies.)