Equity
S&P upgrades Hungary's OTP Bank
The rating actions follow an S&P review of economic and industry risks for Hungarian banks and their individual developments since its last review in July 2016.
A year ago, S&P raised its l-t ratings on OTP Bank and its core subsidiary OTP Mortgage Bank to 'BB+' from 'BB'. At the same time, it affirmed its 'B' short-term foreign and local currency counterparty credit ratings on both banks.
S&P has also affirmed its long- and short-term counterparty credit ratings on Magyar Takarékszövetkezeti Bank ZRt. (Takarékbank) at 'BB/B'. The outlook on Takarékbank, the central bank of Hungary's savings bank co-operatives, remains positive, reflecting S&P’s view that the restructuring of the group and its new "five-year strategy" is likely to lead to a gradual improvement of profitability and performance over the next 12 months.
Hungary is in investment grade at all three major rating agencies. Fitch was the first to lift the country from junk grade in mid-May last year, and S&P and Moody’s followed suit in mid-September and early November, respectively. OTP is already in investment grade at Moody’s.
S&P highlighted the following factors in its analysis:
A year ago, S&P raised its l-t ratings on OTP Bank and its core subsidiary OTP Mortgage Bank to 'BB+' from 'BB'. At the same time, it affirmed its 'B' short-term foreign and local currency counterparty credit ratings on both banks.
S&P has also affirmed its long- and short-term counterparty credit ratings on Magyar Takarékszövetkezeti Bank ZRt. (Takarékbank) at 'BB/B'. The outlook on Takarékbank, the central bank of Hungary's savings bank co-operatives, remains positive, reflecting S&P’s view that the restructuring of the group and its new "five-year strategy" is likely to lead to a gradual improvement of profitability and performance over the next 12 months.
Hungary is in investment grade at all three major rating agencies. Fitch was the first to lift the country from junk grade in mid-May last year, and S&P and Moody’s followed suit in mid-September and early November, respectively. OTP is already in investment grade at Moody’s.
S&P highlighted the following factors in its analysis:
- Economic and industry risks for banks in Hungary are decreasing.
- Credit growth has resumed in absolute terms, property markets are recovering, and the banks have left the worst behind in terms of credit losses.
- S&P also now views the overall quality of the regulation and supervision and the regulatory track record as being in line with best practices.
- S&P believes diminishing economic and industry risks in Hungary will be supportive for banks' earnings and the cleaning up of nonperforming loans--but it does do not see an immediate rating impact from these developments, in and of themselves, on the three rated banks in the country.
- At the same time, OTP Bank PLC's funding profile has improved and we now see it as better than the average of the Hungarian banking system.
