Fitch upgrades Santander Bank Polska’s VR to bbb+

Investing.com -- Fitch Ratings has upgraded Santander Bank Polska’s (SBP) Viability Rating to ’bbb+’ from ’bbb’ while maintaining its ’A-’ Long-Term Issuer Default Rating on Rating Watch Negative.

The upgrade reflects Fitch’s improved assessment of the Polish operating environment to ’bbb+’ from ’bbb’, which previously constrained SBP’s ratings. This improvement stems from diminishing legal and government intervention risks, which Fitch expects will no longer materially affect Polish banks’ business prospects.

SBP’s Rating Watch Negative status reflects the potential impact of Erste Group Bank’s agreement with Banco Santander (BME:SAN) to acquire a controlling 49% stake in the Polish bank. The transaction is expected to close in 4Q25, pending regulatory approvals.

Fitch currently rates SBP’s Long-Term IDR one notch below Banco Santander’s, indicating a very high probability of support. The rating agency will reassess this support framework once the acquisition completes, examining Erste’s ability and willingness to provide support to SBP.

SBP holds a leading position in Poland’s banking sector, ranking third with slightly above 10% market share in both loans and deposits. The bank maintains a well-balanced client base between retail and corporate customers.

Asset quality metrics have improved, with the impaired loans ratio decreasing to 3.9% at end-March 2025. Fitch expects further improvement supported by the resilient Polish economy and decreasing interest rates.

The bank’s profitability remains strong, with operating profit to risk-weighted assets reaching 4.9% in 2024 despite high legal costs. Fitch expects net interest income to remain healthy in 2025-2026 despite lower interest rates.

SBP’s common equity Tier 1 ratio stood at 17.3% at end-March 2025, which Fitch expects to remain above 16% in 2025-2026, supported by good internal capital generation and moderate risk-weighted asset growth.

The bank’s funding is underpinned by its strong domestic franchise providing a stable deposit base, with a loans-to-deposits ratio slightly below 80% at end-2024.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.