Yesterday, Fitch Ratings confirmed a long term issuer default B- rating with Stable Outlooks , a B rating for Short-Term IDRs and a B- for Viability Ratings for National Bank of Greece, Alpha Bank, Piraeus Bank and Eurobank Ergasias.
The agency also improved the senior debt rating of the four Hellenic banks to B-/RR4 from a previous CCC/RR5. The subordinated debt rating upgraded to CC/RR6 from the prior C/RR6 ranking.
After the nation experienced a recession that lasted six years, Fitch determined that the banks' asset quality was weak. At 2013's end, Fitch stated that problem loan ratios, increased to 45.6% for Alpha Bank, 41.3% for Piraeus Bank , 31.7% for Eurobank and 29.7% for National Bank of Greece. Reserves against problem loans were less than 50%, which Fitch ranks as low in a stress case.
Fitch has predicted that asset quality deterioration will remain for 2014's entirety, yet at a slower speed that is affected in the lull between NPL recognition and economic improvement. Fitch has forecasted 0.5% real 2014 GDP growth.
All of the studied Hellenic financial institutions experienced capital improvements, via private mechanisms. This was recently seen this month in NBG's 2.5 billion euro equity act. Alpha Bank and Piraeus Bank are planning to pay back state preference shares in full.
The international credit rating agency believes that the Greek banks' pre-impairment profitability will advance in 2014, due to lower funding synergies and costs. The associated elements will offer additional adaptability to generate elevated impairments, and control internal capital generation this year.
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