Moodyʼs concludes rating reviews of OTP, OTP Jelzálogbank, MKB

Ratings

Ratings agency Moodyʼs concluded rating reviews of Hungaryʼs OTP Bank, OTP Jelzálogbank and MKB Bank, following the introduction of the rating agencyʼs revised bank rating methodology published in March, the rating agency said on Friday.

Moodyʼs upgraded the local currency deposit ratings of OTP Bank and its mortgage unit OTP Jelzálogbank to Baa3/Prime-3 from Ba1/Not Prime and affirmed the banksʼ baseline credit assessments at ba2.

"OTP Bank benefits from a large volume of deposits, and limited senior and subordinated debt, resulting in very low loss given failure. However, because of the implementation of resolution legislation, Moodyʼs has lowered its government support assumptions for the bank to ‘moderateʼ from ‘highʼ, leading to no uplift due to government support from one notch previously," Moodyʼs said in  its report.

The outlook on the banksʼ long-term deposit ratings is stable. Moodyʼs also confirmed Hungarian state-owned MKB Bankʼs long-term deposit rating at Caa2 and affirmed its baseline credit assessment of ca.

"The affirmation of the BCA at ca reflects the fact that the bank is consistently loss-making, and requires frequent external capital injections from its parent," the ratings agency said.

Moody’s noted that the ratio of problem loans in the lenderʼs portfolio had risen to 32.2% at the end of 2014 from 30.2% a year earlier.

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