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Investing.com -- Moody’s Ratings has upgraded the long-term deposit and senior unsecured ratings of Eurobank S.A. to Baa1 from Baa2 on March 17, 2025. The Baseline Credit Assessment (BCA) and Adjusted BCA of the bank have also been increased to baa3 from ba1. The short-term deposit ratings have been affirmed at P-2.
Eurobank’s long-term Counterparty Risk Ratings (CRR) were lifted to Baa1 from Baa2, and its long- and short-term Counterparty Risk Assessments (CR Assessment) to Baa2(cr)/P-2(cr) from Baa3(cr)/P-3(cr). The bank’s short-term CRR were confirmed at P-2.
The long-term junior senior unsecured (senior non-preferred) MTN program ratings were promoted to (P)Baa3 from (P)Ba1, and the senior unsecured MTN program ratings were bumped up to (P)Baa1 from (P)Baa2. Eurobank Ergasias Services and Holdings S.A.’s subordinated (Tier 2) debt rating was also upgraded to Ba1 from Ba2, and its subordinate MTN program ratings were lifted to (P)Ba1 from (P)Ba2.
The outlook for the senior unsecured debt and long-term deposit ratings of Eurobank has been changed to stable from positive following these ratings upgrades.
The upgrade of Eurobank’s BCA was prompted by the recent sovereign upgrade for the Government of Greece (to Baa3 stable from Ba1 positive), which previously constrained the bank’s standalone credit profile. This was supported by its robust and diversified earnings generation capacity combined with improved asset quality.
In 2024, Eurobank’s core pre-provision income (excluding the recently acquired Hellenic Bank Public Company Ltd in Cyprus) increased by almost 4%, and its net profit by 9% on the back of a 14% increase in fee and commission income and good cost management. The bank achieved a return on tangible common equity of 18.5% during 2024, incorporating a net profit contribution of around €709 million from its Southeastern European operations.
As of December 2024, Eurobank had a pro-forma common equity Tier 1 (CET1) ratio of 15.7% down from 16.1% in 2023, reflecting the capital impact from the Hellenic Bank acquisition. The bank’s solvency is further supported by stronger asset quality, with a pro-forma nonperforming exposures (NPE) to gross loans ratio falling to 2.9% in December 2024 from 3.5% in December 2023.
The bank’s BCA also reflects its comfortable liquidity with a net loans to deposits ratio of around 65% and liquidity coverage ratio (LCR) of 188% in December 2024. Eurobank’s funding profile has improved further with the full repayment of its European Central Bank funding, and a Minimum Requirement for Own Funds and Eligible Liabilities (MREL) position of 29.4% in December 2024 meeting comfortably its final target of 27.8% for June 2025.
The outlook for Eurobank’s long-term deposit and senior unsecured ratings was changed to stable from positive, reflecting the Greek government’s rating outlook. Over time, upward deposit and senior unsecured debt rating pressure could arise for the bank following further improvements of the country’s macro-economic environment, which could trigger a sovereign rating upgrade. Conversely, Eurobank’s long-term ratings could be downgraded in the event of any significant deterioration in NPE levels or recurring profitability.
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