Fitch Ratings on Tuesday upgraded Greece’s four systemic banks ratings, following a recent round of upgrades of Greece’s credit rating.
Fitch Ratings upgraded Eurobank SA’s Long-Term Issuer Default Ratings (IDRs) to ‘BB’ from ‘BB-‘, and Viability Ratings (VRs) to ‘bb’ from ‘bb-‘. The outlooks on the Long-Term IDRs are Stable.
The upgrades reflect structural improvement to Eurobank’s profitability from higher interest rates and low deposit rates; on careful cost management; and normalised loan impairment charges (LICs) following the bank’s successful strategy to reduce balance-sheet risk. This has allowed the bank to accumulate capital, strengthening buffers relative to regulatory requirements and provided greater flexibility to pursue investments and growth initiatives, which we expect to result in greater business-model sustainability.
Fitch Ratings also upgraded National Bank of Greece SA’s Long-Term Issuer Default Rating (IDR) to ‘BB’ from ‘BB-‘ and Viability Rating (VR) to ‘bb’ from ‘bb-‘. The outlook on the Long-Term IDR is Stable.
The upgrades reflect structural improvement to NBG’s profitability from higher interest rates and low deposit rates; on careful cost management; and normalised loan impairment charges (LICs) following the bank’s successful strategy to reduce risk on its balance sheet. This has allowed NBG to accumulate capital well above regulatory requirements and provided strategic flexibility to pursue investments and growth initiatives, which we expect to result in greater business model sustainability.
Fitch Ratings upgraded Piraeus Bank SA’s Long-Term Issuer Default Rating (IDR) to ‘BB-‘ from ‘B’ and Viability Rating (VR) to ‘bb-‘ from ‘b’. The outlook on the Long-Term IDR is Stable.
The upgrade reflects the acceleration of Piraeus’s strategy to reduce risk on its balance sheet, which led to a marked reduction of its non-performing exposure (NPE) ratio to levels more closely in line with higher-rated peers. It also reflects the strengthening of its regulatory capital ratios and the resulting reduction in capital encumbrance by unreserved problem assets (which include NPEs and foreclosed assets). The upgrade further considers Piraeus’s structurally improved profitability, which will drive further capital accumulation; stable funding; and improved access to the wholesale debt market to meet minimum requirements for own funds and eligible liabilities (MREL).
Fitch Ratings has upgraded Alpha Bank SA’s Long-Term Issuer Default Ratings (IDRs) to ‘BB-‘ from ‘B ’ and Viability Ratings (VRs) to ‘bb-‘ from ‘b ’. The outlooks on the Long-Term IDRs are Stable.
The upgrade reflects structural improvement in Alpha’s profitability, which will drive further organic capital generation and result in stronger capital ratios. The upgrade also reflects the continued downward trajectory in the bank’s non-performing exposure (NPE) ratio, stable funding and improved access to the wholesale debt market to meet minimum requirements for own funds and eligible liabilities (MREL).
Moody’s ratings
Moody’s Investors Service has today upgraded the long-term deposit ratings of six Greek banks that it rates (Alpha Bank SA, Attica Bank SA, Eurobank SA, National Bank of Greece SA, Pancreta Bank SA, and Piraeus Bank SA), by either one or two notches, as well as the stand-alone Baseline Credit Assessment (BCA) of those banks. The outlook for the long-term deposit ratings for all six banks is positive following their rating upgrades.
The rating action was driven by structural improvements in the Greek economy, as well as significant enhancements in banks’ financial fundamentals. It also captures the rating agency’s view of the good prospects for Greek banks to sustain their relatively strong financial performance in the next two years, which will also enhance their tangible capital base and loss absorbing capacity.
The principal rating driver is the better operating and credit conditions in Greece, providing a more supportive operating environment for the country’s banks. Structural improvements and reforms have improved the economy’s resilience to shocks, triggering a recent sovereign rating upgrade to Ba1 (stable) from Ba3 (positive).
As a result, Moody’s has raised the Macro Profile it assigns to Greece to ‘Moderate ’ from ‘Moderate-‘, which in turn exerts upward pressure to all six rated banks’ standalone credit profiles.
Moody’s believes that Greek banks are now better prepared to face new headwinds and challenges, resulting from inflationary pressures and increasing interest rates that will likely impact more vulnerable borrowers.