(Finance) – Morningstar DBRS has confirmed the ratings Of BPER Bank, including the Long-Term Issuer Rating at “BBB” and the Short-Term Issuer Rating at “R-2 (high)”. The trend was changed to “Positive” from “Stable”.
The trend upgrade reflects the improvement of the bank’s ability to generate recurring profits driven primarily by higher interest margins, improved operational efficiency and lower credit costs. Morningstar DBRS believes that expected interest rate cuts, coupled with higher financing costs and potentially higher credit costs due to new asset quality risks, could absorb some of the recent improvement in profitability levels. However, according to analysts, BPER’s earnings capacity will likely remain above its historical average, aided by its diversified revenue mix and its commitment to cost control, which will help the bank perform well in the expected interest rate environment lower.
The positive trend also takes into account thefurther improvement of the risk profile of BPER over the last 12 months despite some early, albeit limited, signs of deterioration in asset quality in the first quarter of 2024. At this stage, Morningstar DBRS does not expect a material increase in the current low default rates following the rate hike of interest and the slowdown in economic activity. Therefore, BPER should be able to maintain its overall good asset quality metrics with a view to further risk reduction, solid coverage levels and some support for credit expansion driven by the expected reduction in lending rates. interest.
The confirmation of credit ratings reflects the well-established and diversified position of the bank in Italy resulting from recent integrations, as well as its adequate capital, funding and liquidity position, which leverages its large and granular customer deposit base and improved access to capital markets.