Moody’s upgrades Kutxabank’s long-term deposit rating to A3, puts entity on stable outlook

The international agency Moody’s has raised the rating of long-term deposits of Kutxabank to A3, and placed it in a stable outlook, as reported by the Basque institution.

In a statement, he explained that his decision upgrades the Bank’s intrinsic credit rating (BCA) from Baa2 to Baa1, CRR rating from A3 to A2 and non-preferred debt rating from Baa3 to Baa2, and changes the outlook to stable. .

In its arguments on the evolution of Kutxabank, Moody’s positively evaluates the advancement of credit metrics, the improvement in profitability and its “strong capital position, in a context of slowdown”.

Likewise, he also highlights the Bank’s “improvement of profitability” to pre-Covid levels and evaluates the structure of its mortgage portfolio, which he believes “could be favored in the new context of interest rates, also in consideration of the new regulatory charges (extraordinary tax on banks) and the increase in costs due to inflationary pressures.

Furthermore, Moody’s points out in its note the ability of Kutxabank to reduce its default rate to 1.4%, well below the industry average of 3.6%. It also puts the ratio of impaired assets below the industry average and maintains one of the highest levels of coverage.

The agency believes that the context of economic slowdown will cause an increase in household and corporate delinquency, although it believes that Kutxabank’s “solid starting position” in terms of capital and risks will allow it to maintain “a good position”.

Kutxabank maintains its relations at the head of the Spanish financial system. Its CET1 Ratio and its Total Solvency Ratio in its phased-in version are above 17%.