DBRS Ratings GmbH (Morningstar DBRS) upgraded all credit ratings of Piraeus Bank S.A., including the Long-Term Issuer Rating to BBB from BB (high).
Concurrently, Morningstar DBRS upgraded the Bank’s Long-Term Deposits to BBB from BBB (low). The trend on all credit ratings was changed to Stable from Positive. The Bank’s Intrinsic Assessment (IA) has been upgraded to BBB from BB (high) and its Support Assessment remains SA3.
The 2-notch upgrade and the Stable trend reflect strong and sustained improvements in the Group’s earnings power and risk profile, that mark the continued improvements in the Group’s credit profile, including a strengthening of its capital buffers over supervisory requirements, despite higher dividend distributions and significant loan growth.
Morningstar DBRS’ view is that Piraeus’ profitability will likely remain adequate in the coming future despite interest rate cuts, higher personnel expenses, and digital investments, mostly reflecting loan book expansion, revenue diversification initiatives, and cost optimisation measures. At the same time, Morningstar DBRS expects the Group’s asset quality metrics not to deviate materially from current levels, helped by further de-risking as well as more robust nonperforming exposure (NPE) coverage, and credit expansion prompted by good prospects for the Greek economy, projects connected to the European Recovery and Resilience Facility funds, and lower rates.
The credit ratings continue to consider Piraeus’ robust domestic franchise in retail and corporate banking, and its stable funding and liquidity position, which relies on a large and sticky deposit base. Nonetheless, the credit ratings also incorporate the moderate diversification of Piraeus’ business model, revenue streams, and funding structure as well as the Group’s still relatively weak capital structure, which incorporates a still high¿albeit lower and set to reduce faster¿level of deferred tax credits (DTCs).
