Fitch upgrades two Czech Banks

Fitch Ratings said it upgraded the individual ratings of Czech Republic-based Ceskoslovenska Obchodni Banka (A+/stable/F1) and Ceska Sporitelna (A-/stable/F2) to B/C from C.

The upgrade of Ceskoslovenska Obchodni Banka reflects a strengthening of the bank's franchise, a clean balance sheet and a good track record as a conservative, well-managed institution, the agency said. It also considers the bank's acceptable, although declining, capitalization, excellent liquidity and a supportive macroeconomic environment.

Fitch said the upgrade of Ceska takes into account the bank's stronger franchise and its continued satisfactory asset quality, strong profitability and sound risk management. However, the rating also reflects an increasing exposure to the domestic real estate sector, through a rapidly growing residential loan book, which has yet to be tested.

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