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Moody’s Investors Service has upgraded Bank of Cyprus’ long-term deposit rating to A3 from Baa1 and revised its outlook to stable.
The U.S. credit rating agency said the upgrade reflects the bank’s continued improvement in asset quality and its expectation that the lender will keep reducing residual asset risks while maintaining a stronger standalone financial position.
In the report accompanying the upgrade, Moody’s said it expects Bank of Cyprus to sustain stable profitability and solid capital metrics. Although earnings may decline as interest rates return to more normalized levels, the bank’s profitability is expected to remain steady, supported by low loan-loss provisions, high non-interest income, and improved operational efficiency.
The stable outlook on the bank’s long-term deposit and senior unsecured debt ratings also reflects Moody’s view that asset risks will continue to decline and that the bank’s overall financial profile will remain sound. This assessment is based on Cyprus’ stable macroeconomic environment and factors in the bank’s upcoming debt maturities and planned refinancing over the next three years.
Bank of Cyprus now holds the highest deposit rating among Greek and Cypriot banks, according to internal sources at the bank.
