S&P Global Ratings has upgraded the Bank of Cyprus to “BBB-” from ‘BB+’, marking a significant milestone for both the bank and the broader Cypriot banking sector. This upgrade reflects the bank’s improved financial stability and creditworthiness, along with the country’s favorable economic conditions.
Key factors contributing To The upgrade include:
- Strengthened Liquidity and Capital Ratios: As of mid-2024, the Bank of Cyprus boasts a net stable funding ratio of 188% and a liquidity coverage ratio of 328%, indicating a solid financial position and reduced risk of deposit outflows.
- Improved Access to Capital Markets: The bank has gained better access to international capital markets, supported by Cyprus’s strong economic momentum and its improved credit standing. This has enhanced investor confidence and facilitated easier access to foreign capital.
- Resilient Profitability and Capitalization: Despite declining interest rates, the Bank of Cyprus is expected to maintain strong profitability, bolstered by its strategic hedging positions and ongoing efficiency improvements. The bank’s capital ratio is forecast to remain robust over the next 18-24 months.
- Funding Stability: Cypriot banks, including Bank of Cyprus, have made significant strides in reducing reliance on less stable non-resident deposits. Additionally, improvements in the loan-to-core deposit ratio have enhanced the overall stability of the banking sector’s funding base.
- Supportive Economic Environment: Cyprus’s economic outlook remains positive, even amidst interest rate reductions, contributing to a stable and optimistic growth trajectory for the Bank of Cyprus.
This upgrade to investment grade reinforces Bank of Cyprus’s solid position in the regional financial landscape and is expected to bolster investor confidence further.
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