Fitch ups Slovenian banks, cuts Banka Intesa

Fitch Ratings said it upgraded the long-term issuer default rating of Abanka dd to BB+ from BB, and those of Nova Kreditna Banka Maribor and Nova Ljubljanska Banka dd to BB from BB-.

At the same time, the agency downgraded Banka Intesa Sanpaolo dd's long-term issuer default rating to BBB- from BBB.

The outlooks are stable.

Fitch said the issuer default ratings of Abanka, Nova Ljubljanska and Nova Kreditna are driven by their standalone financial strength, as expressed by their viability ratings. Nova Ljubljanska’s senior unsecured debt rating is in line with its long-term issuer default rating.

The upgrades of the viability ratings and issuer default ratings reflect: an improvement in Slovenian economic environment coupled with ongoing restructuring of the corporate sector; reduced downside asset quality risks given the banks' extended track record of gradual recoveries of substantial legacy non-performing loans (NPLs, loans 90 days overdue plus otherwise impaired loans) and only modest new NPL generation; considerable capital buffers further supported by de-leveraging and very modest growth; and banks' robust funding and liquidity profiles.

However, the viability ratings of all four banks including Banka Intesa reflect still high stocks of legacy NPLs (more limited at Banka Intesa) and only moderate profitability given low interest rates and limited loan growth potential, the agency explained.

Fitch said the downgrade of Banka Intesa's long- and short-term issuer default ratings follows a similar rating action on its parent, Intesa Sanpaolo SpA (BBB/stable/bbb), as Banka Intesa's issuer default ratings are driven by support from Intesa Sanpaolo.

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