Investment grade for BoC and Hellenic

After 12 years, Moody’s has upgraded the ratings of Cyprus’ two major banks, Bank of Cyprus and Hellenic, back to investment level.

This upgrade, announced on Tuesday, includes raising their long-term deposits from Baa3 to Ba1 and their core credit ratings and adjusted baseline credit assessment from Ba3 to Ba2. Notably, the outlook for the ratings on the long-term deposits and senior unsecured debt of both banks is now positive.

This rating boost is primarily attributed to the sustained strength of the Cypriot economy and credit conditions, creating favorable operational circumstances for Cypriot banks. This improvement prompted Moody’s to elevate Cyprus’ macro profile rating from “moderate-” to “moderate.”

The assessment notes the continual enhancements in the financial stability of both banks, marked by gradual improvements in asset quality and capital metrics, as well as a notable strengthening of their core profitability.

The positive outlook reflects Moody’s expectation that the two banks will maintain stable profitability and capital metrics while addressing any potential new nonperforming loans resulting from an elevated interest rate environment and persistent inflation.