ECONOMY

Moody’s ups Eurobank

Moody’s, the credit rating agency, yesterday announced an upgrading in EFG Eurobank Ergasias’s ratings outlook to positive from stable based on the bank’s strong domestic franchise, strong expansion into high-margin sectors and good financial fundamentals. The news lifted Eurobank’s stock by 2.17 percent yesterday in the Athens Stock Exchange, contributing to the market’s late rally and pushing the benchmark general index up by 0.14 percent. Moody’s said it changed to positive from stable the outlook for the A3/Prime-2 foreign currency deposit ratings and C financial strength rating assigned to Eurobank. It said the upgrading «reflects the bank’s positive franchise dynamics in its domestic market, with a growing presence in high-margin sectors exhibiting good growth potential.» Strong organic growth and a number of key acquisitions in recent years, among them Telesis Investment Bank, Ergobank, Interbank and Creta Bank, have helped Eurobank to leapfrog over other more established banks. It is now the third-largest bank in the country, behind National Bank and Alpha Bank. The takeovers, in particular the first two, reinforce Eurobank’s presence in the small and medium-sized enterprises sector and investment banking, Moody’s pointed out. It also cited the bank’s strong financial fundamentals, notably its «good recurring core profitability» and «relatively low reliance on volatile trading income.» Eurobank could face risks ahead in the shape of increased competition and growing operating expenses, Moody’s said. It could also find it difficult maintaining its current operational efficiency and preserving the quality of its assets as its loan book matures. The Commission will find staunch supporters among smaller eurozone countries as it resists any move to soften the pact.