Moody’s has elevated the long-term deposit ratings of both Bank of Cyprus and Hellenic Bank from Ba1 to Baa3. This upgrade, as detailed in a recent press release, is driven by the persistent robustness of the Cypriot economy, favorable credit conditions, and a supportive banking environment.

Just last week, Cyprus saw its long-term credit rating boosted by two notches from Ba1 to Baa2, propelling the nation into the investment-grade category. Moody's has retained a positive outlook on both banks, anticipating their steady profitability and ongoing risk reduction.

According to the agency, the ratings uplift captures the evolving solvency profiles of Cypriot banks. These banks have experienced enhanced asset quality, stronger capital metrics, and considerable fortification in core profitability.

For Bank of Cyprus specifically, improvements in asset quality and capital metrics were emphasized. The bank has reduced its nonperforming exposures (NPEs) from 4.0% in December 2022 to 3.6% by June 2023. Furthermore, coverage surged to 78% of NPEs by June 2023. The bank also reported an elevated Common Equity Tier 1 (CET1) capital ratio, reaching 16.0% by June 2023, a notable rise from the 15.2% at the end of 2022.

Hellenic Bank, on the other hand, has made strides in asset quality and capital metrics, boasting a reduction in NPEs from 3.6% at the close of 2022 to 3.3% by June 2023 (excluding 90% government-guaranteed NPEs). The bank’s CET1 ratio also grew significantly from 19.1% at the end of 2022 to 20.8% by June 2023. Further commendable was the increase in net income to tangible assets to 1.6% during the first half of 2023, a marked leap from 0.4% throughout 2022, spurred by favorable interest rates and judicious cost-reducing measures.

The recent promotion of the Bank of Cyprus' long-term rating to Baa3 from Ba1, with a positive outlook, marks the bank's return to the investment grade after a 12-year hiatus, the bank's CEO, Panikos Nikolaou stated.

This upgrade reflects the significant progress the Group has made in its endeavor to become a strong, well-capitalized, and sustainably profitable financial institution, added the CEO of Cyprus' largest bank. He concluded by saying that today's upgrade of the Bank of Cyprus represents a positive development for both the bank and Cyprus.