ECONOMY

Fitch affirms EFG Eurobank ratings, cites strengthening domestic role

LONDON (Reuters) – Fitch Ratings, the international rating agency, has today affirmed EFG Eurobank Ergasias’s («Eurobank») ratings at Long-term A- (A minus), Short-term F2, Individual B/C and Support 2. Outlook remains stable. At the same time, the agency has assigned a BBB+ rating to Eurobank’s forthcoming issue of 400 million euros’ worth of subordinated floating-rate notes due 2014. The long-term, short-term and individual ratings of Eurobank reflect its strengthening position within the fast-growing Greek banking sector, its satisfactory underlying profitability and sound capital base. They also take into account the bank’s rapid lending growth to the relatively nascent retail segment of the market. The bank’s underlying profitability is satisfactory, and it has a good capacity to earn fee income compared to its peers, making it less vulnerable to margin pressure that is likely to intensify in the future. Operating efficiency is improving, thanks to the cost savings generated by investments in automating procedures and by reallocations of staff throughout the group. The main area of risk facing the bank is its increasing exposure to the rapidly growing retail segment, which has boomed following the removal of lending restrictions to individuals and the boost to the economy arising from Greece’s entry into European Monetary Union.