The house confirmed the long-term and short-term assessment of Trce Bank 'BB-' and 'B'
Bank of Cyprus has been upgraded by S&P Global Ratings (S&Ps), which upgraded the bank's outlook from stable to positive citing the diversified business model and the easing of financial risks for the country's entire banking system.
At the same time, the house confirmed the long-term and short-term ratings of the Bank of Cyprus at 'BB-' and 'B' respectively, while in the same rating act it upgraded the ratings of the Greek banks, National Bank, Piraeus Bank, Eurobank, Alpha Bank and Aegean Baltic.< /p>
“In our view, Cypriot and Greek banks will increasingly enjoy the fruits of the long-term de-risking of their balance sheets and the restoration of income from interest rate increases, significantly strengthening the absorption capacity losses and the potential for capital formation,” says S&Ps.
In particular, for the Bank of Cyprus, the house states that the decision to upgrade the outlook to positive reflects its assessment that the financial risks for the entire banking system are receding.
“Our assessments for the banks reflect the its leading network in the country, benefiting from its diversified business model and the significant progress achieved in reducing the stock of non-performing loans over the last decade”, notes the house.
He also points out that Bank of Cyprus has simultaneously improved its capitalization in the wake of easing financial risks and divesting risk-weighted assets, which will give it a buffer to absorb “any expected deterioration in asset quality”.
He points out, however, that Bank of Cyprus still lags behind higher-rated banks in terms of profitability and efficiency, “although we expect (the bank) to gradually close this gap over the next 12 to 18 months.” .
Regarding the assignment of the positive outlook, the house notes that this reflects the possibility of upgrading the rating in the next 12 months if there is further progress in the business environment of Cyprus and in particular a significant reduction in financial risks.
“We expect that the Bank of Cyprus' efficiency and profitability will improve significantly over the next 12 months compared to the recent past, aided by rising interest rates and cost savings associated with recent voluntary staff reductions, while management will remain focused on maintaining the quality of of assets under control”, concludes the house.
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