Moody’s upgrades Bankinter’s rating to ‘Baa1’

All of Bankinter’s ratings are improving. The ratings agency, Moody’s, upgraded the bank’s long-term credit rating by one level, from Baa2 to Baa1, with a stable outlook.

This upgrade also effects all its other ratings. The US agency has also upgraded Bankinter’s rating for long-term deposits from Baa1 to A3, with a stable outlook. Subordinated debt was upgraded from Ba1 to Baa3; preference shares, from Ba3 to Ba2; long-term counterparty risk, from A3 to A2; short-term counterparty risk, from Prime-2 to Prime-1; and baseline credit assessment (BCA), from baa3 to baa2.

Moody’s rationale for upgrading these ratings stems mainly from the bank’s quality of assets, in addition to its expectation that the bank will continue to improve over the next 12 to 18 months. The agency gives a positive assessment of the bank’s NPL ratio, which stood at 3.1% in March of this year, versus the system average of 5.4%.

The agency also highlights Bankinter’s profitability, outperforming the other listed banks in Spain. It points out that the bank’s return on assets (RoA) stands at 0.7% versus the Spanish banking system average of 0.5% and the European system average of 0.44, despite the difficulties of the current interest rate environment. In addition, it mentions the low reliance of the bank’s earnings on trading income, which accounted for less than 5% of its total operating income in 2018, which denote its ability to generate recurring profits.

Lastly, today’s press release points out the bank's strong solvency position, affected somewhat by its recent acquisition of EVO Banco, which was integrated at the end of May. The agency notes that the minimum capital requirements set for Bankinter by the ECB ( 8.20% of CET1) are the lowest for any listed bank in Spain. This puts Bankinter in a comfortable position, particularly since it ended 2018 with a CET1 capital ratio of 11.75%.

Overall, Bankinter's rating upgrade by Moody’s, which comes only three days after it lowered its outlook on the Spanish banking system from positive to stable, underscores the bank’s robust solvency and quality of assets as well as its ability to continue to generate profits through its typical operations.