PIRAEUS FINANCIAL HOLDINGS S.A.
Announcement
Fitch upgrades the credit rating for Piraeus Bank to " Α-"
The international rating agency Fitch upgraded the Long-term credit rating for Piraeus Bank to "Α-" from "ΒΒΒ+", while changing the rating outlook to "stable". The remaining ratings remained unchanged at "F2" for the Short-term credit rating and at "B/C" for the individual rating.
The rating acknowledges the Bank's ongoing good performance, the improvement of its activities in Greece and selected countries of Southeastern Europe, the enhanced capital base, the good risk management system and the improved asset quality ratios. Furthermore, it reflects the risks related to the fast increase in loans, in markets that have not yet been through downturn periods (both in Greece and in Southeastern Europe), as well as the growing asset and income market share in emerging markets of a higher risk.
Although Piraeus Bank increased its activities in retail banking, loans to small and medium enterprises (46% end of the first Quarter of 2008) and to big enterprises (22%) still constitute the greater part of the loan portfolio. As a result, the net rate margin is slightly lower compared to all other Greek banks, but the strong development of the loan portfolio and the low operating and credit costs have lead to the improvement of the Bank's profitability in the past years. The profitability also benefited from the stable operating environment in Greece and Southeastern Europe, where the economies are expected to grow during 2008-9 with a rate higher than the European Union average.
Regarding the credit risk, Fitch notes that Piraeus holds one of the best portfolio quality indicators in the banking sector and that the accumulation per sector is relatively low. There is also reference to the Bank's successful efforts to strengthen its deposit base, since client deposits exceed the increase in loans, leading to an improved liquidity. Finally, the increase of the share capital in September 2007 by euro 1.35 billion strengthened the Bank's capital base and increased the Tier 1 (according to Basel II) to 8.8% in the first quarter of 2008.
The international rating agency Fitch upgraded the Long-term credit rating for Piraeus Bank to "Α-" from "ΒΒΒ+", while changing the rating outlook to "stable". The remaining ratings remained unchanged at "F2" for the Short-term credit rating and at "B/C" for the individual rating.
The rating acknowledges the Bank's ongoing good performance, the improvement of its activities in Greece and selected countries of Southeastern Europe, the enhanced capital base, the good risk management system and the improved asset quality ratios. Furthermore, it reflects the risks related to the fast increase in loans, in markets that have not yet been through downturn periods (both in Greece and in Southeastern Europe), as well as the growing asset and income market share in emerging markets of a higher risk.
Although Piraeus Bank increased its activities in retail banking, loans to small and medium enterprises (46% end of the first Quarter of 2008) and to big enterprises (22%) still constitute the greater part of the loan portfolio. As a result, the net rate margin is slightly lower compared to all other Greek banks, but the strong development of the loan portfolio and the low operating and credit costs have lead to the improvement of the Bank's profitability in the past years. The profitability also benefited from the stable operating environment in Greece and Southeastern Europe, where the economies are expected to grow during 2008-9 with a rate higher than the European Union average.
Regarding the credit risk, Fitch notes that Piraeus holds one of the best portfolio quality indicators in the banking sector and that the accumulation per sector is relatively low. There is also reference to the Bank's successful efforts to strengthen its deposit base, since client deposits exceed the increase in loans, leading to an improved liquidity. Finally, the increase of the share capital in September 2007 by euro 1.35 billion strengthened the Bank's capital base and increased the Tier 1 (according to Basel II) to 8.8% in the first quarter of 2008.