Moody’s Revises Ratings and Outlook for Hungarian Banks

Moody’s has recently announced its updated ratings for several major Hungarian banks, including Raiffeisen Bank Zrt, K&H Bank, Erste Bank Hungary Zrt, and the Hungarian Development Bank (MFB). The ratings reflect the institutions’ financial positions, as well as broader economic conditions and risks.

Moody’s upgraded Raiffeisen Bank’s Baseline Credit Assessment (BCA) from ‘ba1’ to ‘baa3,’ citing improvements in its financial performance, robust profitability, strong capital position, and liquidity.

The agency affirmed Raiffeisen’s ‘A3’ deposit rating and ‘Baa3’ long-term senior unsecured liabilities rating, reflecting confidence in its operations.

K&H Bank’s BCA rating of ‘ba1’ was affirmed by Moody’s, noting its strong profitability, robust asset quality, and stable deposit base. Despite expected profitability pressure from central bank interest rate cuts, K&H’s funding profile remains solid.

Moody’s also affirmed K&H’s ‘A3’ long-term deposit rating, indicating strong support from its Belgian parent, KBC Bank.

The credit rating agency confirmed MFB’s (Hungarian Development Bank) ‘Baa2’ rating for senior unhedged foreign currency liabilities and deposits, reflecting the Hungarian government’s full ownership and state guarantees. The rating aligns with Hungary’s sovereign rating, with Moody’s viewing MFB as crucial to Hungary’s economic policy.

Moody’s assigned a negative outlook to the long-term deposit ratings of Erste, K&H, Raiffeisen, and MFB, citing Hungary’s negative outlook on its sovereign debt.

The agency stated that the deposit ratings could remain two notches above Hungary’s sovereign rating, even if a downgrade occurs. Moody’s recent report highlights the financial stability of these banks but reflects concerns regarding Hungary’s broader economic outlook.

Moody’s assigns credit ratings based on an institution’s financial strength. The Basel Credit Assessment (BCA) evaluates a bank’s intrinsic credit quality, while deposit ratings indicate the likelihood of repayment to depositors. Ratings like ‘A3’ and ‘Baa2’ represent investment-grade ratings, with ‘A’ being higher than ‘B’. A negative outlook signals potential downgrades.

Via MTI; Featured Image: Pixabay