March 3, 2017 / 4:07 PM / 9 months ago

Fitch Upgrades Two Austrian Banks After Sector Review

(The following statement was released by the rating agency) LONDON, March 03 (Fitch) Fitch Ratings has concluded its periodic review of three large Austrian banks, upgrading the Long-Term Issuer Default Ratings (IDRs) and Viability Ratings (VRs) of Erste Group Bank (to A-/Stable/a- from BBB+/Stable/bbb+) and Volksbanken-Verbund (to BBB-/Positive/bbb- from BB+/Positive/bb+) and affirming the ratings of UniCredit Bank Austria at 'BBB+'/Negative/'bbb+'. The rating actions reflect primarily the strengthening of the banks' risk profiles, driven by considerable restructuring progress achieved until end-2016 amid a benign economic environment in Austria. The upgrade of Erste's ratings reflects the bank's active balance sheet clean-up at its weaker central and eastern European (CEE) operations. We expect that the improved economic prospects across most of the bank's core EU CEE markets and the recovering performance of the bank's Romanian and Hungarian operations will result in higher and more balanced profit generation as profit contributions from the strong Czech and Slovakian units and lower-margin domestic operations should remain broadly stable. Volksbanken-Verbund's upgrade is driven by greatly reduced execution risk due to the group's well-executed and largely-completed restructuring programme. The resulting more robust risk infrastructure and more coherent management practices strengthen the group's risk profile and business model. We expect the streamlined group structure to enable a gradual improvement of revenue generation and cost efficiency in the medium term. The affirmation of Bank Austria's ratings reflects the bank's considerably reduced risk appetite and much improved asset quality following the transfer of the CEE business to parent bank UniCredit S.p.A. (BBB+/Negative/bbb+) in 4Q16. The Negative Outlook mirrors that of UniCredit as we expect that capital will become increasingly fungible within the UniCredit group. This could constrain Bank Austria's financial flexibility as the bank works to realign its business model. For the overall Austrian banking sector, we expect earnings to broadly stabilise in 2017 as restructuring costs have largely been provisioned for and impairment charges are likely to remain close to their cyclical lows. In light of the recurring margin pressure in the saturated and highly competitive Austrian market, cost control and pricing discipline are key to mitigating earnings erosion from a low interest rate environment in the medium term. While the sector is generally increasing its focus on addressing its high fixed costs in its home market, the sector could benefit from pricing discipline and reduction of over-capacity. We expect that Erste's and Bank Austria's capitalisation will no longer improve significantly as the banks have reached their target capitalisation, and we expect that rising dividend payouts should mark the end of several years of focus on profit retention driven by profit pressure in CEE and increasing regulatory requirements. However, internal capital generation will remain a key focus at Volksbanken-Verbund in light of its commitment to accelerating the repayment of the capital injected by the Austrian government in 2009. The solid and resilient funding profiles of the three banks continue to benefit from their established domestic deposit franchises. The rating actions commentaries published today on the three banks are available at Contact: Patrick Rioual Senior Director +49 69 768 076 123 Fitch Deutschland GmbH Neue Mainzer Strasse 4650 60311 Frankfurt am Main Krista Davies Director +44203 530 1579 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: Additional information is available on Related Research 2017 Outlook: Austrian Banks here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below