Fitch Ratings has affirmed Bank of Valletta's (BoV) Long-term Issuer Default Ratings (IDR) at 'BBB+' with a Stable Outlook, Short-term IDR at 'F2', Viability Rating at 'bbb+', Support Rating at '2' and Support Rating Floor at 'BBB'.
The affirmations, it said, reflect the bank's strong funding base, satisfactory liquidity and adequate profitability. The ratings also reflect the bank's reliance on the country's small and concentrated economy and its asset quality, which is still weak despite some of the improvements achieved by management in the past few years.
"As the largest bank in Malta, the bank continues to benefit from large volumes of stable and inexpensive customer deposits. As loans only account for just over half of total assets, liquidity is also satisfactory, with the balance of assets largely invested in relatively highly rated EU sovereign bonds. At end-September 2011, the bank had EUR1.1bn of unencumbered securities eligible for ECB refinancing."
The agency added that given the bank's strong market shares, its ability to price risk has remained relatively unaffected by competitive issues. Its net interest margins...
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