Three Greek banks get a ratings boost

Fitch Ratings upgraded and affirmed the credit rating of three Greek banks, it revealed in its report on Tuesday.

The agency upgraded Eurobank Ergasias S.A.'s (Eurobank) Long-Term Issuer Default Rating (IDR) to 'CCC+' from 'CCC' and Viability Rating (VR) to 'ccc+' from 'ccc'. The Outlook on its Long-Term IDR is Positive. A full list of rating actions can be found at the end of this rating action commentary.

The upgrade follows Eurobank's recent accelerated reduction of its non-performing exposures (NPE), which means it has a lower NPE/gross loans ratio than any of its Greek peers. The upgrade also reflects the bank's improved funding and liquidity profile, though from a weak position. Since February 2019 the bank has not been reliant on Emergency Liquidity Assistance (ELA) and deposit inflows are improving. The Positive Outlook reflects expectations that Eurobank's asset quality will improve substantially over the next 12 to 24 months, easing pressure on capital and ultimately boosting operating profitability.

Fitch Ratings affirmed Alpha Bank's Long-Term Issuer Default Rating (IDR) at 'CCC+' and Viability Rating (VR) at 'ccc+'. Alpha's ratings reflect its exceptionally weak, albeit improving, asset quality and high capital encumbrance by unreserved non-performing exposures (NPEs). The ratings also factor in an improving funding structure and liquidity position, although the latter remains weak. Alpha's overall financial profile, like that of other Greek banks, is sensitive to Greece's operating environment, which remains highly volatile despite having improved in the past year.

Fitch Ratings has affirmed Piraeus Bank S.A.'s Long-Term Issuer Default Rating (IDR) at 'CCC' and Viability Rating (VR) at 'ccc'. Piraeus' ratings reflect its exceptionally weak asset quality and very high capital encumbrance by unreserved non-performing exposures (NPEs). The ratings also factor in an improved funding profile due to growing deposits and better, albeit still scarce, liquidity. Piraeus' overall financial profile, like that of other Greek banks, is sensitive to Greece's operating environment, which remains highly volatile despite having improved in the last year.

Fitch Ratings has affirmed National Bank of Greece S.A.'s Long-Term Issuer Default Rating (IDR) at 'CCC+' and Viability Rating (VR) at 'ccc+'. NBG's ratings of NBG reflect its exceptionally weak, although improving, asset quality and high capital encumbrance by unreserved non-performing exposures (NPE). The ratings also factor in a better funding structure and liquidity position compared with peers, although the latter still remains weak. NBG's overall financial profile, like that of other Greek banks, remains sensitive to Greece's operating environment, which remains highly volatile despite having improved in the last year.