Fitch Ratings has confirmed the long-term rating assigned to the Austrian banking group Erste Group Bank AG, which owns BCR in Romania, at the level of “A” with a stable outlook and the Viability Rating (VR) at the level of “a”, reports Agerpres.

The short-term qualification for F1 was also confirmed, according to the press release of the financial assessment agency. Fitch notes that Erste’s ratings are underpinned by its well-established universal business model with its important retail and SME banking franchise in Austria and Central and Eastern Europe (CEE).

The ratings also take into account the stable quality of the group’s assets, solid revenues, adequate capitalization and stable financing, the agency estimates.

The group’s significant operations in the less developed and more volatile countries of Central and Eastern Europe (CEE) result in a slightly weaker operating environment compared to that of the banks that focus only on Austria.

As a result, Fitch expects Erste to report better financial performance than the Austrian-only banks to maintain its Viability Rating (VR) at ‘a’.

The agency expects the CEE markets to continue to provide good risk-adjusted returns, and the bank’s strategic commitment to the region supports Fitch’s assessment of the group’s business profile. Erste’s asset quality remains stable despite slowing economic growth, rising interest rates and high inflation, including in CEE countries.

On the contrary, Erste’s upward revision in the medium term is limited. An upgrade to the Long-Term Rating and Viability Rating (VR) will require further improvement in the operating environment in CEE, higher profitability and higher capital adequacy ratio, while maintaining the current stable asset quality.

The agency warns that it may downgrade Erste if asset quality and profitability deteriorate significantly.

A detailed assessment of Erste Group Bank by Fitch can be found HERE.