Fitch Upgrades Hellenic Bank’s and Bank of Cyprus’s Credit Rating

On November 3, 2023, international rating agency Fitch announced that they upgraded the credit ratings of Hellenic Bank Public Company Limited and Bank of Cyprus Public Company Limited.

Accordingly, Hellenic Bank Public Company Limited’s Long-Term Issuer Default Rating (IDR) upgraded to ‘BB+’ from ‘BB-‘, and Viability Rating (VR) upgraded to ‘bb+’ from ‘bb-‘. The Outlook on the Long-Term IDR is Stable.

Simultaneously, Fitch also upgraded Bank of Cyprus Public Company Limited’s (BoC) Long-Term Issuer Default Rating (IDR) to ‘BB’ from ‘B+’ and Viability Rating (VR) to ‘bb’ from ‘b+’. The Outlook on the Long-Term IDR is Positive.

Fitch stated that the upgrade for both of the banks reflects both Banks’ strengthened capitalisation, reduced stock of legacy problem assets (including non-performing exposures (NPEs) and net foreclosed real estate assets), structurally improved profitability and strong deposit franchise, which translates into a large low-cost deposit base.

They said “The upgrade reflects the combination of Fitch’s improved assessment of the Cypriot operating environment and continued improvements in both banks’ credit profiles. Cyprus’s operating environment benefits from our expectation of continued domestic economic growth, improved banking sector fundamentals and reducing, albeit still above-average, private sector indebtedness”.

Experts at the Economist’s 19th Cyprus Summit on 07th – 8th November 2023, also confirmed that the Cypriot banking sector is in the best position it has been in a decade considering the performance of the banking sector in a high-interest rate environment.

Wim Van Aken, head of the European Stability Mechanism’s post-programme surveillance mission in Cyprus, said “Higher interest rates have boosted earnings, are driving solvency ratios above the eurozone average and, so far, asset quality has remained resilient. Since the financial crisis, Cypriot banks have significantly de-leveraged their balance sheets, which resulted in credit ratings of the banks being upgraded.”

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