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CI assigns ‘positive’ outlook to BOCY

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Capital Intelligence Ratings has upgraded its outlook for Bank of Cyprus to ‘positive’, raised its financial strength rating by a notch and affirmed other metrics, a week after S&P Global Ratings also hiked the bank’s rating by a grade.

This follows the October decision by Moody’s to upgrade the bank’s long-term deposit rating to investment grade.

CI Ratings said it revised the outlook for the long-term foreign currency rating (LT FCR) and bank standalone rating (BSR) of Bank of Cyprus to ‘positive’ from ‘stable’. The core financial strength (CFS) rating has been raised to ‘bb+’, from ‘bb’.

At the same time, the rating agency affirmed the bank’s LT FCR and ST FCR of ‘BB’ and ‘B’, respectively, and affirmed BoC’s BSR of ‘bb’ and extraordinary support level (ESL) of ‘uncertain’.

Strong profitability

CI Ratings said the outlook revision and ratings upward adjustment, “reflect the bank’s strongly improved net and operating profitability, and the reduced NPL ratio coupled with robust capital ratios in Q3 23.

“These factors taken together have strengthened the bank’s credit loss absorption capacity and resilience, especially in the event of potential adverse changes in the operating environment.”

The rating agency explained Cyprus’ sound economic performance helped improve the operating environment for banks in terms of asset quality risks, despite moderate lending opportunities, and profitability.

It added that, “the economy remained resilient in 9M 23 despite external adversities. Economic performance is expected to recover further, with the increase in investments and improving net exports in the second half of this year partially offsetting the impact of the war in Ukraine and higher inflation.”