According to Ratings agency Moody's, SBI's future competitiveness will depend on its corporate restructuring plans after assigning a 'Baa2' rating to the bank, implying moderate credit risk.
"Changing staff's public sector mentality and culture and training them to adapt to a more technologically driven environment are necessary corollaries to the success of SBI's plans," Moody's said in a statement.
The ratings agency assigned a Baseline Credit Assessment (BCA) rating of 'Baa2' to SBI, taking into account the lender's status as the largest commercial bank in India and sound financial position.
The 'Baa2' rating implies moderate credit risk and is considered a medium investment grade and as such, may possess certain speculative characteristics.
The public sector bank reported over an 25 per cent jump in June quarter net profit to Rs 2,914.20 crore on the back of high interest income.
The ratings agency cautioned that although the bank's current profitability is satisfactory, it is not at par with other rated banks in emerging markets.
"The rating also reflects SBI's recurring profitability, which, while satisfactory, does not compare particularly favourably with that of other rated Indian banks and other similarly rated banks in emerging markets," it said.
Moody's said the rating acknowledges SBI's challenge to further enhance its franchise value within a highly competitive operating environment.
It said that the bank needs to modernise and transform itself to meet the increased demand from corporate and emerging retail demand.
However, the agency maintained a stable outlook on the bank's future, saying that for the ratings to be upgraded, SBI has to fully leverage the potential in domestic market by getting new business and increasing earnings.
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