Bank of Cyprus improves its rating

On Monday 11 February, Standard and Poor's (S&P) upgraded Bank of Cyprus's rating to 'BBB-', which is equivalent to investment grade.

According to representatives of the financial institution, this is a significant development both for the Bank and for the Cypriot banking sector as a whole, as it reflects the improved financial strength and creditworthiness of Bank of Cyprus, as well as the favourable economic situation in the country.

The main reasons for this decision include:

1. Strengthened liquidity and capital ratios - the banking sector maintains strong liquidity buffers and regulatory ratios, with a net stable funding ratio of 188 per cent and a liquidity coverage ratio of 328 per cent as at mid-2024. These data indicate a stable financial position and reduced risk of rapid deposit outflows.
2. Improved access to capital markets - Bank of Cyprus has benefited from improved access to international capital markets, fuelled by strong economic momentum and improved creditworthiness. This has led to increased investor confidence and easier access to foreign capital.
3. Sustainable profitability and capitalisation - Despite the decline in interest rates, Bank of Cyprus is expected to maintain sustainable profitability due to significant hedging positions and efforts to improve efficiency. Capital adequacy is expected to remain strong over the next 18-24 months.
4. Funding stability - Cypriot banks, including Bank of Cyprus, have significantly reduced their reliance on less stable non-resident depositors and improved their loan to core deposit ratios, which has strengthened the overall funding stability of the banking sector.
5. Favourable economic environment - The economic environment in Cyprus is expected to remain favourable despite the decline in interest rates. This positive outlook is supportive of the Bank of Cyprus's stability and growth prospects.

As a reminder, Standard & Poors, one of the 'Big Three' credit rating agencies along with Moody's and Fitch Rating, dates back to 1860. The company is the creator of the S&P series of stock indices for the US and international securities markets. It employs more than 6,300 people. S&P issues two types of ratings: international and national.