Outlook on Piraeus Bank revised to positive

Standard & Poor’s Ratings Services said that it had revised its outlook on Greece-based Piraeus Bank S.A. to positive from stable. At the same time, the ‘BBB+/A-2’ counterparty credit ratings on the bank were affirmed.

“The outlook revision reflects the continued improvement in Piraeus’ financial profile, with a consistently strong operating performance and significant enhancement in the capital position–strengths that poise the bank to weather even a tougher economic and operating environment,” said Standard & Poor’s credit analyst Angela Cruz.

The ratings on Piraeus balance the bank’s good market position, successful growth strategy, healthy profitability, and sound solvency with its riskier credit profile than Western EU peers’ (albeit improving) and challenging international expansion strategy.

“The ratings will be raised if Piraeus continues to build a successful track record in managing its expansion abroad while preserving adequate asset quality in spite of its strong, above-average credit growth in the domestic market,” said Ms. Cruz. “We also expect Piraeus to manage conservatively its growing wholesale funding needs, with magnified challenges on this front due to tougher conditions in the global markets.”

Standard & Poor’s will also monitor trends in solvency, which we expect will remain adequate relative to the bank’s risk profile, aggressive growth strategy, and associated challenges, despite the likely deterioration from current sound levels due to strong expansion.

Conversely, unexpected asset quality problems, either in Greece or abroad, or a reversal of the positive performance trend would put negative pressure on the ratings.