S&P upgrades Bank of Cyprus to investment grade

S&P Global Ratings has upgraded the Bank of Cyprus to "BBB-", which places it in investment grade.

According to Bank of Cyprus sources, this development is significant for the bank and the wider banking sector in Cyprus, as it reflects the improvement in the bank's financial stability and creditworthiness, as well as the supportive economic situation of the country.

Based on his report, the main reasons for upgrading the Bank of Cyprus are as follows:

• Strengthened Liquidity and Capital Ratios: Bank of Cyprus maintains strong liquidity buffers and regulatory ratios, with a net stable funding ratio of 188% and a liquidity coverage ratio of 328% as of mid-2024. These strong ratios indicate a stable financial position and reduced risk of rapid deposit outflows.
• Improved Access to Capital Markets: Bank of Cyprus has benefited from improved access to international capital markets, supported by strong economic momentum and enhanced creditworthiness. This has led to increased investor confidence and easier access to foreign capital.
• Resilient Profitability and Capitalization: Despite the decline in interest rates, Bank of Cyprus is expected to maintain resilient profitability due to significant hedging positions and efforts to improve efficiency. The capital ratio is expected to remain strong over the next 18-24 months.
• Funding stability: Cypriot banks, including Bank of Cyprus, have significantly reduced their dependence on less stable non-resident depositors and have improved the loan-to-core deposit ratio, strengthening the overall funding stability of the banking sector.
• Supportive Economic Environment: The economic environment in Cyprus is expected to remain supportive despite the reduction in interest rates. This positive outlook contributes to the stability and growth prospects of Bank of Cyprus.

(Source: InBusinessNews)