Moody's has again upgraded Hellenic Bank's rating from Baa3 to Baa2 with a positive outlook.
In addition, Moody's affirmed the bank's short-term counterparty risk ratings (CRR) Prime-2 and short-term counterparty risk ratings (CR) Prime-2(cr).
The upgrade of Hellenic Bank's rating reflects a significant improvement in the bank's asset quality following the agreement to sell its portfolio of past due loans, Moody's said in a statement.
Among other things, the agency stressed that Hellenic Bank's rating continues to include "strong deposit funding and a high level of liquid assets". Moody's positive outlook thus reflects the agency's expectation that the bank will continue to reduce the volume of past due loans and maintain capital and liquidity reserves well above regulatory minimums. All of this will provide Hellenic Bank with the opportunity to further improve its operating environment.
It is worth noting that Hellenic Bank's rating could be upgraded further if the bank makes further progress in improving asset quality, increasing profitability and maintaining high capital and liquidity ratios.
As a reminder, Hellenic Bank reported a very high CET1 regulatory capital ratio of 26.6% in June 2024, compared to 20.8% in June 2023 at the time of the previous update. Capital is therefore expected to continue to grow on the back of improved internal capital generation and slower loan growth, while risks are expected to gradually decline.
Profitability has also developed well. It continued to increase on the back of higher interest rates, with a reported net return on assets of 2.2% in the first half of 2024, compared with 1.6% in the first half of 2023. Going forward, the bank should maintain stable profitability, supported by growth in its insurance business. Finally, Hellenic Bank has experienced a period of higher inflation and interest rates without any impact on its asset quality. In fact, non-performing loans, excluding those that are 90% guaranteed by the government, fell from 3.3% in June 2023 to 2.4% in June 2024.
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