DBRS sees credit sector improving fundamentals


Canada-based rating agency DBRS sees some progress in Greek systemic banks’ efforts to slash their bad loans, but meeting their “ambitious” targets remains a major challenge, despite improvement in the lenders’ fundamentals.

“The four major Greek banks have ambitious targets in place to reduce their large stock of nonperforming exposures (NPEs) and DBRS considers that successful execution is crucial for the restoration of the banks’ fundamentals. The banks are also making some progress in strengthening their net earnings and capitalization.”

DBRS notes in particular that “the improving macroeconomic environment should assist the banks’ efforts to achieve their NPE reduction targets,” that “inorganic solutions are now gaining traction with significant sales and/or securitizations in the pipeline,” and that “banks have also taken steps toward restoring bottom line profitability, and two banks recently strengthened their capitalization levels through the issuance of Tier 2 instruments.”