Moody’s agency improves ratings of some Portuguese banks

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Moody’s today upgraded the rating of several Portuguese banks after a week ago changing the outlook on Portugal’s rating from stable to positive.

“Consequently, Moody’s has changed Portugal’s macro profile from “moderate+” to “strong-” to reflect, first, the improved operating environment for Portuguese banks driven by the country’s economic strength and, second, healthier funding conditions for banks,” the financial rating agency indicates in a statement.

According to the note, today’s actions took into account “a stronger macro profile, as well as continued progress in the performance and financial fundamentals of several banks.”

Moody’s has upgraded the rating on Caixa Geral de Depósitos’ (CGD) long-term deposits from “Baa2” to “Baa1” and maintained the rating on senior unsecured debt at the “Baa2” level.

In the case of BCP, the ratings on long-term deposits were kept at “Baa2” and on senior unsecured debt at “Baa3”.

For Santander Totta and BPI, Moody’s improved the rating for senior unsecured debt from “Baa2” to “Baa1”, while maintaining the ratings for long-term deposits at “A3”.

The agency also maintained Novobanco’s long-term deposit rating at “Ba1”.

Caixa Geral de Crédito Agrícola Mútuo upgraded its ratings on long-term deposits from “Baa3” to “Baa2” and on senior unsecured debt from “Ba2” to “Ba1”.

In turn, Banco Montepio’s ratings were raised from “Ba3” to “Ba2”.

“The positive outlook on the long-term deposit and senior unsecured debt ratings of CGD, BCP, Novo Banco and Banco Montepio (where applicable) reflects Moody’s expectation that improvements in the banks’ credit profiles will be sustained over the next 12 to 18 months,” the agency said.

However, Moody’s anticipates “a moderate increase in problem loans in light of the current unstable operating environment and inflationary pressures on household purchasing power.”

However, the rating agency adds that “such deterioration is unlikely to significantly weaken the credit profiles of these banks, sustaining the positive outlook.

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