Hellenic Bank receives Moody’s rating upgrade with stable outlook

Investing.com -- Moody’s Ratings has upgraded the ratings for Hellenic Bank Public Company Ltd, including its long-term deposit ratings which have been lifted to Baa1 from Baa2, and has adjusted the outlook to stable from positive. The announcement was made in Limassol on March 19, 2025.

The ratings agency has also upgraded Hellenic Bank’s Baseline Credit Assessment (BCA) and Adjusted BCA to baa3 from ba1, and its senior unsecured debt rating to Baa3 from Ba1. The bank’s long-term Counterparty Risk (CR) Assessment has been lifted to A3(cr) from Baa1(cr), while its long-term Counterparty Risk Ratings (CRR) have been upgraded to A3 from Baa1.

The bank’s subordinated Medium-Term Note (MTN) program ratings have been raised to (P)Ba1, from (P)Ba2 and subordinated debt rating to Ba1 from Ba2. The senior unsecured and junior senior unsecured MTN program ratings have been upgraded to (P)Baa3 from (P)Ba1.

The short-term deposit ratings and CRRs, along with the Prime-2(cr) short-term CR Assessment, have been affirmed by Moody’s.

The rating upgrade reflects Moody’s expectation that Hellenic Bank will maintain its improved standalone financial strength. This is also influenced by the recent one notch upgrade to Eurobank S.A.’s ratings, which suggests a higher capacity to support Hellenic Bank if required.

Hellenic Bank’s improved solvency profile is reflected in its upgraded standalone BCA to baa3. The bank’s asset quality has stabilized at improved levels, with nonperforming exposures (NPEs) reported at 2.4% as of December 2024, excluding NPEs that are 90% guaranteed by the government. The bank’s net income remained solid at 2.1% of assets during 2024, compared to 1.8% during 2023.

The bank’s regulatory Common Equity Tier 1 (CET1) capital ratio was at a high of 28.7% as of year-end 2024, up from 22.8% as of year-end 2023. The bank’s standalone assessment also reflects its low-cost, retail-deposit-based funding structure and ample liquid assets.

The rating action also takes into account Eurobank’s recent BCA upgrade to baa3. Eurobank holds 93.5% of Hellenic Bank and has plans to acquire the remaining shares, leading to full ownership of Hellenic Bank. The acquisition will provide a more clear strategic direction, and longer-term benefits like access to expertise from, and greater integration with, the Eurobank group.

The bank’s Adjusted BCA and ratings have been anchored at the baa3 level, limiting the likelihood of any potential downgrade from a lower standalone BCA.

The stable rating outlook on the long-term deposit and senior unsecured debt ratings reflects expectations for stable financial metrics, supported by Cyprus’ solid macroeconomic conditions. The outlook also incorporates the bank’s upcoming maturities and planned refinancing.

Hellenic Bank’s ratings could be upgraded if the domestic operating environment improves, and if the bank’s overall asset quality profile improves further. However, a potential downgrade will need a combination of a weakening in Hellenic Bank’s operating environment or in the bank’s financial fundamentals, and a downgrade in Eurobank baa3 BCA.

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