Ratings agency Moody's Investors Service agency has downgraded the outlook for all its ratings applying to Všeobecná Úverová Banka (VÚB), one of Slovakia's main commercial banks, from stable to negative, it was announced on Thursday, January 31. Moody's reconfirmed VÚB's standalone bank financial strength rating (BFSR) at C-, which is equivalent to a 'baa2' standalone credit rating, as well as its long-term deposit rating (A3) and short-term rating (Prime-2).
The agency explained the negative outlook by reference to a recent drop in VÚB's profitability as well as its high credit concentration, "exposing it to potential asset-quality pressure in the currently uncertain and challenged economic environment in Slovakia", the TASR newswire quoted Moody's as saying. VÚB's extensive engagement in purchasing Slovak government securities was mentioned as another risk factor that was taken into consideration when assessing the outlooks.
VÚB, which is part of the Italian banking group Intesa Sanpaolo SpA, reported a 44-percent drop in its net profits for the first half of 2012 (to €49.7 million). This was mainly caused by the introduction of a bank levy in Slovakia and one-off losses linked to sales of government bonds. In addition, net interest income, which represented 85 percent of the bank's profits in the first half of last year, fell 2 percent year-on-year as a result of growing expenditures on funding the bank's operations and increased competition in the market.
Compiled by Zuzana Vilikovská from press reports
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1. Feb 2013 at 10:00