S&P affirms Takarékbank ratings, suggests bank could do better
Saying the bank compares poorly with its peers, S&P Global Ratings Services yesterday said it affirmed its “BB/B” long- and short-term foreign and local currency counterparty credit ratings on Magyar Takarékszövetkezeti Bank (Takarékbank) with a stable outlook, Hungarian news agency MTI reported.
S&P said it took the ratings actions after noting positive developments in a review of economic and industry risks for the Hungarian banking sector. Among the developments cited were the conversion of FX retail lending stock into forints, the establishment of an asset management company to deal with bad commercial real estate loans and a reduction in banksʼ reliance on external financing.
S&P said Takarékbank “compares poorly, in terms of profitability and earnings generation” with its peers in countries with similar economic and industry risk and rated “BB+” or lower.
It also noted that Takarékbank had only recently enacted a radical transformation and that “it remains to be seen” if its business model and enterprise risk management will prove efficient.
A positive rating action could be taken on the bank if the domestic economy improves and demand for credit picks up, but this would also require a stronger commercial strategy, with higher earnings margins, and better efficiency, with improved earnings buffers and capital sustainability, S&P said.
A negative rating action could be taken if Takarékbankʼs profitability and earnings buffer remain below peers, or if the bankʼs links with the integrated savings cooperatives weaken significantly, it added.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.