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December 8, 2022

Moody’s affirms deposits ratings of Alpha Bank Romania, outlook changed to positive

Moody’s Investors Services affirmed Alpha Bank Romania’s Ba3/Not Prime deposit ratings. Concurrently, Alpha Bank Romania’s b2 baseline credit assessment (BCA) and Adjusted BCA have been affirmed. The outlook on the long-term deposit ratings changed to positive from stable.

This rating action reflects Moody’s opinion that Alpha Bank Romania has made significant progress over the past years in improving solvency, and its funding profile, contributing to upward pressure on the bank’s BCA. This resulted in Moody’s aligning the outlook on Alpha Bank Romania’s ratings with the positive outlook on the Greek parent Alpha Bank AE.

By affirming Alpha Bank Romania’s b2 BCA, the rating agency acknowledges the bank’s overall stronger and more resilient financial fundamentals. The BCA also reflects Alpha Bank Romania’s domestically focused operations and its track record of successfully withstanding challenges to its funding and capitalization since the unfolding of the Greek banking crises in 2010.

Following a series of non-performing loans sales, Alpha Bank Romania has much improved its solvency profile. It reported a non-performing loan ratio of 6% as of H1 2018, significantly down from 14% in 2016. The bank shows strong capitalization with a Tangible Common Equity (TCE) over risk weighted assets (RWA) ratio of 21% and leverage measured as TCE over Assets of 9.9% as of H1 2018. The improved solvency of the bank provides a solid base for the bank’s future loan growth. While core earnings generation is still weak, the agency expect the bank earnings to improve on the back of gradually recovering lending that should partially offset benefits from lower reversals of loan-loss provisions.  A gradual shift in the funding structure of Alpha Bank Romania has lowered the bank’s dependence on parental funding, thereby contributing to the fundamental strengthening of its credit profile.

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