Investing.com -- Moody’s Ratings has upgraded the long- and short-term deposit ratings of Alpha Bank (AT:ACBr) S.A. to Baa2/P-2 from Baa3/P-3 on March 18, 2025. The bank’s Baseline Credit Assessment (BCA) was also improved to ba1 from ba2, reflecting improvements in the bank’s loan quality and financial fundamentals.
Alpha Bank’s long-term senior unsecured rating was upgraded to Baa2 from Baa3, the long-term Counterparty Risk Ratings (CRR) were upgraded to Baa1 from Baa2, and its long- and short-term Counterparty Risk Assessments (CR Assessment) were upgraded to Baa2(cr)/P-2(cr) from Baa3(cr)/P-3(cr). The bank’s long-term junior senior unsecured MTN program ratings, senior unsecured MTN program ratings, and the subordinated MTN program ratings were all upgraded.
Furthermore, Alpha Services and Holdings S.A.’s long-term issuer ratings were upgraded to Ba1 from Ba2. The holding company’s long-term junior senior unsecured MTN program ratings, subordinated debt rating, and subordinate MTN program ratings were all upgraded. The preferred stock non-cumulative rating was upgraded to B1 (hyb) from B2 (hyb). The outlook for the senior unsecured debt and long-term deposit ratings of Alpha Bank, as well as the outlook for the holding company’s long-term issuer ratings, remains positive.
The BCA upgrade was driven by improving solvency and financial fundamentals. The bank’s nonperforming exposures (NPE) reduced to 3.8% of gross loans in December 2024 from 6% in December 2023. Alpha Bank’s asset quality is expected to further improve, with management targeting an NPE ratio below 3% by 2027. The bank has also increased its NPEs provisioning coverage to 53% in 2024 from 45% in 2023.
The bank’s financial performance has improved, with a reported return on tangible equity of 14% in 2024 from 13.1% in 2023. The bank’s solvency improved with a reported common equity Tier 1 (CET1) ratio of 16.3% in December 2024, compared to 14.3% in December 2023. Alpha Bank expects to further increase its CET1 ratio to be higher than 17% by the end of 2027.
The bank’s liquidity coverage ratio (LCR) was 200% and loans-to-deposits ratio was 76% in December 2024. Alpha Bank’s funding profile and capacity has improved further by tapping the international capital markets and meeting its Minimum Requirement for own funds and Eligible Liabilities (MREL) target ahead of time.
Alpha Bank’s long-term deposit and senior unsecured debt ratings were upgraded due to the BCA upgrade. The bank has already issued sufficient bail-in-able instruments to meet its MREL, which provides ample loss absorbing cushion to senior unsecured creditors and depositors.
The positive outlook on the long-term deposit and senior unsecured ratings is maintained, reflecting the expectation that Alpha Bank will continue to improve its credit profile in the next 12-18 months. The bank is likely to increase further its earnings and capital levels, and will reduce its problem loans ratio.
The deposit and senior unsecured debt ratings could be upgraded if there is any further improvement in the bank’s asset quality and profitability. However, Alpha Bank’s ratings could be downgraded in the event of a sharp increase in its new NPEs formation, without any significant improvement in its recurring profitability, or any deterioration in the operating environment.
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