ÎÎ¤ÎÎÎS – Moody’s Investors Service (Moody’s) on Monday raised the ratings of long-term deposits of National Bank of Greece SA, Eurobank SA and Alpha Bank SA from Caa1 to B2 and the rating of long-term deposits of Piraeus Bank SA to B3 by Caa2. The outlook for deposit ratings for the four banks is positive.
The rating agency also raised the long-term counterparty risk (ARC) ratings of the National Bank of Greece SA, Eurobank SA and Alpha Bank SA from Ba3 (cr) to B1 (cr) and from Piraeus Bank SA to B1 (cr) from B2 (cr). The long-term counterparty risk ratings (CRR) of the National Bank of Greece SA, Eurobank SA and Alpha Bank SA have also been upgraded to Ba3 from B2 and for Piraeus Bank SA to B1 from B3. All banks’ short-term ratings were confirmed at Not-Prime (NP) and their short-term CRA at NP (cr). At the same time, Moody’s upgraded the Core Credit Rating (BCA) of National Bank of Greece SA, Alpha Bank SA and Eurobank SA to b3 from caa1, and the BCA of Piraeus Bank SA to caa1 from caa2.
Today’s rating action on the four largest Greek banks was mainly motivated by the improvement in the quality of their assets and their solvency and the good prospects for improving their recurring profitability, factors which exert a upward pressure on their BCAs, the credit rating agency said in a report. In addition, the banks’ deposit rating upgrades also reflect their recent and forthcoming MREL (Minimum Requirement for Equity and Eligible Liability) eligible debt issues until the end of 2025, which will change the structure of their debt. bank commitments and will strengthen the available cushions. to protect depositors.
The positive outlook reflects Moody’s expectations that the four banks will continue to improve their credit profiles and be in a good position to handle any further problematic loan formation in the wake of the coronavirus pandemic. Ratings could be upgraded in the coming quarters if banks keep their capital and liquidity strong, while fully implementing their transformation plans by further reducing their problem loans and tapping into the economic and credit growth potential of the Greek economy, which will benefit significantly from the EU’s Recovery and Resilience Facility (FRR). Greece’s real GDP jumped 16.2% year-on-year in the second quarter of 2021 and is expected to grow by around 5% on average in 2021 and 2022, providing good opportunities for banks to increase their loan portfolios and support their income.
Nonetheless, Greek banks’ BCAs are still constrained by the quality of their capital, with significant deferred tax credits (DTCs) in the capital structure, and also by the challenge of further reducing their problem loans and cost of debt. risk, as well as improve their core profitability by controlling expenses and registering new business, Moody’s said.