S&P Global Ratings on Tuesday said it raised its long and short-term resolution counterparty ratings (RCRs) on Hungaryʼs OTP Bank and its unit OTP Mortgage Bank from "BBB-/A-3" to "BBB/A-2," state news agency MTI reported.
At the same time, S&P affirmed its "BBB-/A-3" long and short-term issuer credit ratings (ICRs) on both banks. The outlook remains stable.
The ratings action followed an upgrade of Hungaryʼs sovereign rating from "BBB-" to "BBB" on Friday, driven by "sound growth prospects in the country, supported by high private savings and real wage gains sustaining domestic demand, as well as the ongoing expansion of export capacity in the automotive and services sectors."
"We now see a lower risk of OTP Bankʼs default on senior liabilities that may be protected with an effective bail-in resolution process," S&P said.
"OTP continues to benefit from its dominant competitive position in Hungary, geographic diversity of foreign operations, sound capitalization, and improving asset quality metrics," the ratings agency added.