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EMEA Financial Institutions Monitor 3Q2020: Low Profitability Lingers On

S&P Global Ratings considers that weaker asset quality and revenue pressure due to the combined effects of the COVID-19 pandemic and the low oil price challenge the profitability of many financial institutions operating in Europe, the Middle East, and Africa (EMEA).

Supported by various stimulus measures, European economies have started to reopen since the first wave of the pandemic appears to have passed its peak. It is too early to gauge the full severity of the recession and the associated costs as the virus has not disappeared and the exact shape of the recovery remains unclear. However, the fiscal and monetary policy responses--including a recently agreed €750 billion support package aimed at funding post-pandemic economic-relief measures across the EU--have been immediate and robust, improving financing conditions and reducing liquidity risks for many companies and households. These measures have also supported bank borrowers' performance in the second quarter of 2020.

However, key risks for EMEA economies remain, namely:

  • A resurgence of the pandemic before a vaccine becomes available;
  • Deteriorating credit fundamentals raising solvency issues for borrowers, notwithstanding short-term liquidity support measures;
  • An escalation in bilateral trade tensions globally, including the risk of the U.K. and EU not negotiating a free trade agreement (FTA); and
  • Uncertainty and job insecurity inhibiting a recovery in consumer spending.

The duration and severity of the global economic downturn and the strength of the recovery will shape banks' asset quality. Key drivers shaping the outcomes for the various banking sectors and individual banks are the structure of the economy, the effectiveness of fiscal support from governments to their economies, as well as banks' forbearance measures. We see banks' transparency regarding their asset-quality metrics as a key element in investors' confidence in banks.

We consider the following the top risks for the EMEA banking sectors:

  • A harsher macroeconomic environment, either because of a second wave of the pandemic in the fall that forces governments to reinstate containment measures, or because of a change in behavioral patterns, leading to a slower, longer recovery phase.
  • A lack of agreement between the U.K. and the EU on their future trade relationship. This could result in an even weaker outlook for the economies of the U.K. and, to a lesser extent, some EU member states with strong economic ties to the U.K., impinging further on banks' (primarily U.K. banks') asset quality.
  • Limited effectiveness of governments' and banks' measures in containing companies' and households' financial stress, ultimately resulting in more significant asset-quality problems.
  • Banks' lack of decisive response to their profitability problem. This reinforces low profitability as a structural issue that will weigh on banks' ability to generate capital internally and externally, and ultimately act as an effective intermediator of savings and credit in the economy.

S&P Global Ratings acknowledges a high degree of uncertainty about the evolution of the coronavirus pandemic. The consensus among health experts is that the pandemic may now be at, or near, its peak in some regions but will remain a threat until a vaccine or effective treatment is widely available, which may not occur until the second half of 2021. We are using this assumption in assessing the economic and credit implications associated with the pandemic (see our research here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.

We continue to expect that bank downgrades resulting from the COVID-19 pandemic will be limited this year.  The net rating bias for financial institutions in EMEA has been markedly negative since April this year. This reflects the downward revision of our central economic forecasts since the beginning of the year due to the effects of the pandemic and low oil prices, and the potential longer-term impact on banks' profitability. Nevertheless, we anticipate that bank ratings will be largely resilient in 2020, for the following reasons:

  • Governments' significant direct support to the corporate and household sectors;
  • Extraordinary support measures and flexibility from governments and regulators to ensure that banks continue lending. This support typically takes the form of liquidity injections, credit guarantees, short-term forbearance, and a relaxation of regulatory capital and liquidity requirements;
  • European banks' generally strong capital and liquidity positions at the onset of the pandemic, supported by a material strengthening in bank regulations over the past decade;
  • Our base-case expectation of a 5.5% rebound in eurozone GDP in 2021, after a sharp contraction by 7.8% this year (global GDP: 5.3% rebound in 2021 after a contraction of 3.8% in 2020). This contraction and ensuing recovery varies considerably between EMEA countries; and
  • Long-term investments in digitalization and innovation. Despite geographic variations, many banks in EMEA have for years been investing in their digital transformation and adopting new technologies to meet customers' evolving expectations and control costs. This has enabled the banks to continue providing a quality service to customers despite the various containment measures that have affected some other businesses severely.

Supportive policy has restored liquidity in the markets, and the risk of short-term liquidity shocks is limited for most eurozone banks.   Since COVID-19 started spreading in various countries, central banks responded to the first signs of volatility and the economic stress they expected in their respective regions. The European Central Bank (ECB) has announced an unprecedented range of measures to support eurozone economies and financial systems grappling with the effects of the COVID-19 pandemic. Its actions intend to ensure, among other things, that liquidity keeps flowing to households and private-sector companies. Most European banks have rebalanced their funding profiles since the last economic downturn and have significantly strengthened their liquidity positions. Consequently, we consider that Europe's banks do not face short-term refinancing risks.

Support measures that the ECB has launched for the eurozone over the past three months include but are not limited to the following:

  • The introduction of a pandemic purchase emergency program (PEPP), initially set at €750 billion and increased to €1.35 trillion in June. The PEPP aims at supporting funding conditions in the real economy and runs until June 2021.
  • The revision of the terms for the third targeted longer-term refinancing operation (TLTRO III) to ease the conditions for banks to borrow from central banks and channel cheap funding to domestic economies.
  • The launch of pandemic emergency longer-term refinancing operations, which allow banks to discount different classes of bonds on favorable terms.
  • Temporary capital relief to enhance banks' capacity to lend to the private sector.
  • The establishment of currency swap lines with other central banks to ensure that, despite market volatility, European banks can accommodate customers' potentially rising demand for foreign-currency assets.
  • Expansion of the ECB eligibility criteria, for instance to include nonfinancial commercial paper, and the easing of collateral standards to ensure that counterparties can make full use of the refinancing operations.

Despite increased market volatility, financing conditions have been very supportive of investment-grade borrowers following the introduction of unprecedented monetary and fiscal support measures. Speculative-grade issuers' access to funding remains sporadic, but volatility and risk premiums are back to levels that should encourage greater primary market activity.

EMEA banks will face increased credit costs over the next two years.  The COVID-19 pandemic and governments' responses to it will have large and long-lasting effects on banks' asset quality. Across the 88 banking systems we cover globally, we forecast credit losses of about $1.3 trillion in 2020--more than double the 2019 level of $0.6 trillion. In line with our economists' forecasts of a broad, strong economic recovery in 2021, we expect that losses that year will fall back to a more manageable $0.8 trillion--though this would still be more than one-third above the 2019 level. While we expect that on average banks' preprovision earnings over the period will be able to absorb these increases, some banks will incur net operating losses.

Our projections for credit losses vary widely across regions and countries, in terms of both the size and timing of the loss recognition. Of the $926 billion total increase in credit losses we forecast this year and next year globally (compared with 2019), Western Europe accounts for $120 billion. We believe substantial monetary and targeted fiscal stimulus measures have helped support investor confidence and contribute to asset recovery prospects.

Banks' asset quality will remain vulnerable.  Banks' future creditworthiness will largely depend on how and when economies in the region rebound after the sharp contraction in the first half of 2020. The central banks' supportive stance has been key to preventing a credit crunch, but governments' policies, fiscal capacity, and flexibility are even more important to restore the region's economies and enhance business conditions for local companies. In this context, the efficiency of governments' measures to aid the nonfinancial sectors will play a significant role in how banks' asset quality evolves.

Despite a wide range of monetary and fiscal initiatives to reinforce corporate businesses--in the form of grants, loan guarantees, corporate sector purchase programs, and deferred tax arrangements--the recovery of corporate sectors appears fragile and uneven. A further economic setback would cause the quality of banks' loan books to deteriorate sharply and credit losses would end up eroding their earnings and capitalization more than we expect.

The risk of the U.K. and EU failing to negotiate an FTA by year-end is elevated.  While negotiations to reach an FTA similar to a limited "Canada-plus" type agreement appear to have stalled, the U.K. government remains committed to exiting the transition period on Dec. 31, 2020, even if no FTA is in place. Without an agreement, which could still happen late in the year, goods trade between the U.K. and the EU would revert to World Trade Organization rules, with little provision for services. Relative to shocks from the pandemic, failure to reach an FTA would come at an incremental cost, most directly in the form of tariff and nontariff trade barriers. We estimate that this cost to U.K. GDP would be around 1% in aggregate by 2023, compared to the cost under the limited FTA the U.K. government is now aiming for. The direct economic cost to the EU will be lower still, but with greater sensitivity among smaller, open, EU economies with close trading links to the U.K., including Ireland, Belgium, the Netherlands, and Norway.

Banks in emerging markets face additional risks.  Many of the rating actions or outlook revisions we have taken so far this year were on banks in emerging markets. This reflected the generally lower ratings on banks in these markets; the greater sensitivity of some of these economies to the oil price decline; and the specific features of some of these banking systems, such as lending or funding concentrations. In addition to the asset-quality deterioration that we expect for banks in EMEA markets, some banks in emerging markets face additional sources of risk, including:

  • Heavy reliance on external funding amid changing investor sentiment (for example, in Turkey);
  • Concentration on specific sectors (such as hospitality, or industrial or service exports to developed countries) or commodities (such as oil or gas);
  • A lack of government capacity to provide extraordinary support, weaker governance and efficiency of government institutions, as well as a higher likelihood of political and social tensions; and

Currency fluctuations. For certain emerging-market banks, currency fluctuations will likely contribute to the deterioration in asset quality and capital, due to the still-high level of foreign-currency loans.

Key Banking Sector Risks In EMEA

The table below presents S&P Global Ratings' views about the key risks and risk trends for banking sectors in EMEA where we rate banks. For more detailed information, please refer to the latest Banking Industry Country Risk Assessment (BICRA) on a given country. According to our methodology, BICRAs fall into groups from '1' to '10', ranging from what we view as the lowest-risk banking systems (group '1') to the highest-risk (group '10').

Table 1

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Selected Research

We have recently published a number of articles highlighting our views on EMEA banking sectors:

The Future Of Banking

Technological disruption leads to new customer expectations and new forms of competition, but also offers new opportunities for banks. All these trends may ultimately influence the credit profiles of banking industries across the globe. We have published a number of articles highlighting our views on the readiness of various banking sectors to face the challenges and opportunities arising from the development of financial technology and digital transformation:

Economic, Sovereign, And Other Research

Rating Methodology News Research

BICRA Changes

Over the past quarter, we made the following changes to our Banking Industry Country Risk Assessments (BICRAs):

Austria

We have revised our economic risk trend for Austria to negative from stable. Until the start of March, Austrian banks were fully engaged with the same two key themes that have been paramount in recent years--harmonizing balance-sheet strength with solid investor returns, and identifying how to refine business and operating models in the face of the looming risks and opportunities of the digital era.

For the short term at least, the COVID-19 pandemic has changed (almost) everything. In addition to the human cost, large parts of economic activity in Austria and much of the rest of Europe have ground to a halt. With isolation strategies still very much in force, our economists expect a sharp economic contraction in the second quarter of 2020, followed by a rebound starting in the third quarter. However, they are now more cautious on the strength of recovery through end-2020 and into 2021, envisaging a 7.3% GDP contraction in the eurozone, with a recovery of about 4.3% in 2021. Even under this base case, the effects of COVID-19 will be evident for long after the crisis subsides.

Authorities have delivered unprecedented policy responses in the form of monetary, fiscal, and regulatory support to their economies. The better-capitalized, better-funded, more-liquid banks that have gradually emerged in Austria since the 2008-2009 global financial crisis have played an instrumental role as a conduit of the expansion of low-cost credit to affected households and businesses. However, while we expect banks in Austria and across Europe to remain resilient in the face of this short-term cyclical shock, we expect there will be a meaningful impact on asset quality, revenues, profitability, liquidity, and, potentially, capitalization.

We expect very few of these negative trends to be strongly evident in Austrian banks' first-quarter results, but consider that they would become increasingly evident through the course of 2020 and persist into 2021. Bank asset quality will be key to this outcome.

Belgium

We have revised our economic risk trend for Belgium to negative from stable. We believe the COVID-19 pandemic is lowering the earning prospects for all banks in the region. This stems from corporates' and small-to-midsize enterprises' (SMEs') impaired ability to repay debt, as well as constrained household incomes. Despite their differences, the economies of Benelux (the economic union comprising Belgium, the Netherlands, and Luxembourg) are similar in that they are very open, and therefore largely dependent on the situation of their main European partners. Exports of goods and services represent more than 80% of GDP in Belgium.

We expect the COVID-19 pandemic to cause a severe recession in Belgium in 2020. While we expect a recovery in 2021, it will not immediately and entirely offset the damages caused to the economy, household wealth, and various corporate sectors.

Croatia

We have revised our economic risk trend for Croatia to negative from stable due to rising economic risk for Croatian banks as a result of the COVID-19 pandemic. We anticipate that the Croatian economy will face a deep recession over the coming months from a sharp contraction in domestic demand and falling tourism receipts. We therefore believe that domestic banks' profitability and asset quality will deteriorate in 2020 and potentially in 2021, before gradually stabilizing. We expect Croatia's GDP to contract by 9% in 2020, followed by a U-shaped recovery with a 5.3% rebound in GDP in 2021. However, this upturn will not immediately and entirely offset damage to the economy. We chiefly attribute this to the hit to the tourism sector (which contributes about 20% of GDP) from the COVID-19 pandemic.

We anticipate that asset quality will remain a key issue for the Croatian banking sector. As a result, we forecast ongoing high credit losses, at about 170 basis points (bps), despite government support programs. Furthermore, in our view, the Croatian private sector has not yet fully recovered from the past recession. Private-sector indebtedness at year-end 2019 stood at 93% of GDP, one of the highest levels among Central and Eastern European peer countries. Nevertheless, nonfinancial entities are less indebted than they were 10 years ago during the previous financial crisis. We view this as positive because much of the sector's heavy credit losses came from that segment.

Cyprus

We have revised our economic risk trend for Cyprus to stable from positive. Recessionary conditions have slowed the recovery in the property markets and the creditworthiness of the private sector. The pandemic, the resulting global economic slowdown, and impact on the country's tourism, travel, and services sector have diminished the prospects for a faster cleanup of legacy problem loans, where significant progress was about to be made by banks, with the support of some government initiatives. We estimate that real GDP will contract 7.5% in 2020, followed by a rebound of 5.5% in 2021 largely because of the pandemic's hit to the tourism, trade, and construction sectors-–representing about 32% of GDP.

Until the beginning of March, the largest Cypriot banks were fully involved in sizable market transactions to accelerate the cleanup of legacy nonperforming exposures (NPEs) and reduce NPE ratios to more normalized levels--about 15% of gross loans--and generally become more efficient and digitalized. Given the importance of the demand-sensitive tourism and real estate sectors, we expect the credit quality of exposures to these sectors to decline.

Finland

We have revised our economic risk trend for Finland to negative from stable. Until the start of March, Finnish banks were fully engaged with the same two key themes that have been paramount in recent years: harmonizing balance-sheet strength with solid investor returns, and identifying how to refine business and operating models in the face of the looming risks and opportunities of the digital era. For the short term at least, the COVID-19 pandemic has changed almost everything. In addition to the human cost, large parts of the economy have ground to a halt. Given the isolation strategies still very much in force, S&P Global Economics expects a sharp economic contraction in the second quarter of 2020, followed by a rebound starting in the third quarter. However, S&P Global Economics is now more cautious about the strength of recovery through the rest of 2020 and into 2021, envisaging a 7.3% GDP contraction in the eurozone, with a recovery of about 4.3% in 2021.

France

We have revised both our economic risk trend and our industry risk trend for France to negative from stable. We see increased downside risks to French banks' credit profiles resulting from the economic and financial-market implications of the COVID-19 pandemic. We expect the pandemic to cause a severe recession in France and most European countries in 2020. We anticipate a recovery in 2021, but not one that will immediately and entirely offset damage to the economy, household wealth, and various corporate sectors. We also note that this crisis comes at a time when the French banking sector was already suffering profitability pressures from low interest rates and heavy cost bases.

Georgia

We have revised our economic risk trend for Georgia to stable from positive. This reflects the implications of the upcoming recession. However, under our base-case scenario, the economy will recover in 2021-2022. The country's economy has absorbed a number of shocks and demonstrated its ability to adjust to external challenges in previous crises.

Greece

We have revised our economic risk trend for Greece to stable from positive. We estimate that real GDP will contract 9.0% in 2020, followed by a rebound of 5.0% in 2021, chiefly because of the pandemic's hit to the tourism, trade (commerce), travel, and construction sectors. The outbreak has heightened the risk of a significant delay in Greek banks' projects to clean up their asset quality and restore their precarious earnings. Greek banks had about €68 billion of NPEs as of Dec. 31, 2019, and they were targeting to clean up about €30 billion-€35 billion of this stock during 2020 and 2021, mostly through sales and securitizations.

We believe that the pandemic and associated measures will hinder the recovery prospects for the property markets, SMEs, and in turn, the chances of recovery for commercial and mortgage loans backed by property. We anticipate a temporary fall in demand for bad Greek debt, as the recession in Europe could test not only the appetite of potential buyers for distressed portfolios, but also banks' own collections ability, as well as that of domestic and foreign distressed debt purchasers operating in Greece. We also believe that, in this environment, the recent implementation of Hercules, the Greek government's asset protection scheme, is unlikely to speed up the expected pace of problematic asset disposal.

We have also revised our industry risk trend for Greece to stable from positive because we expect the events mentioned above will keep earnings weak and hinder banks temporarily from further diversifying their funding profiles with longer-term and more affordable foreign funding.

Hungary

We have revised our economic risk trend for Hungary to stable from positive. This reflects that the medium-term improvement we originally expected is no longer realistic. At the same time, in our base-case scenario, we consider that our current economic risk assessment has sufficient room to be sustained as revenue deteriorates and the cost of risk rises across the banking system. Hungarian banks will inevitably suffer a rise in credit losses in 2020 and 2021, but we consider structural economic risks in the economy are lower than during the 2008-2009 financial crisis. Banks suffered from heavy credit losses in the commercial real estate segment, which was overheating shortly before the onset of that crisis, and the foreign currency risks embedded in Swiss franc housing loans are no longer issues today. Therefore, we expect credit risks to rise, but not to be exacerbated, as they were during the 2008-2009 financial crisis.

Iceland

We have revised our BICRA for Iceland to group '5' from group '4', and our industry risk score to '6' from '5'. We anticipate a sharp reduction in economic activity for Iceland and Europe in 2020. In our view, this will exacerbate the structural weaknesses of the domestic banking industry.

We have also revised our economic risk trend for Iceland to negative from stable. The longer and deeper the economic contraction, the more it could impair Icelandic banks' asset quality, increase credit losses, reduce business and revenue generation, and potentially erode its capital. The banks' structural exposures to local SMEs--including tourism, which we view as a more vulnerable sector in the current context--and their exposure to the commercial real estate and construction sectors (about 20% of the total loan book) increase the risks. We generally consider that small-to-midsize banks with loan concentrations to SMEs in regions that are strongly affected by the COVID-19 pandemic are most susceptible, in the near term, to the deteriorating environment. Therefore, we now see a negative, rather than stable, trend for economic risk for the banks.

We have also taken a more conservative stance on the overall banking industry risks in Iceland. Icelandic banks were already facing a structural decline in their profitability levels and the current crisis will exacerbate this trend, in our view. The declining interest rates are putting net interest margins under mounting pressure. This, coupled with the stiff competition from pension fund mortgage lending in a low-diversified industry, made for bleak revenue trends. In addition, it will take time for the efforts to improve efficiency to materialize and counteract the inertial cost inflation in the banking industry.

At the same time, credit provisions will increase materially as the effects of the COVID-19 pandemic build. We expect the cost of risk to reach about 100 bps on average for the three commercial banks in 2020, from 30 bps in 2019, and the total amount of nonperforming assets (NPAs) on average loans to exceed 5% in the next two years (from about 3% in 2019). At the same time, we expect the lower-than-average NPA coverage ratio to remain around the current level, 40% on average. As a result, we expect banks to be close to breakeven in 2020, and profitability levels to remain structurally low through 2021.

Ireland

We have revised our industry risk trend for Ireland to negative from stable. This reflects the heightened downside risk we see for Irish banks to generate structurally sound profitability, which is more acute than fundamental and prolonged economic weakness in the economy. Indeed, profitability is under increasing pressure, due to a persistently high cost base as Irish banks continue investing in business transformation and digital capabilities, amid compressing interest margins and a lack of business diversity. Growth opportunities are modest and competition stiff given high industry concentration and the relatively small size of the domestic economy and bankable population. The rating actions we have taken reflect that we now see Irish banks' profitability remaining structurally low for at least the next two years, with return on equity in the low single digits.

Italy

We have revised our economic risk trend for Italy to negative from stable. We see increased downside risks to various Italian financial institutions' credit profiles due to the economic and financial-market implications of the COVID-19 pandemic. We expect this pandemic to cause a severe recession in Italy, and indeed in most European countries, in 2020. Although we expect a recovery in 2021, we anticipate it will not immediately and entirely offset the damage caused to the economy, household wealth, and various corporate sectors.

We have also revised our industry risk trend for Italy to stable from negative. In our opinion, the relatively high cost base, compared with the amount of revenue banks are able to generate, constrains their ability to cushion rising business and credit losses. We think this could create more economic incentives for structural changes in the banking sector, including further consolidation over time. We also note that European authorities recently launched supportive measures, including the ECB's enlarged bond-buying program and funding availability for eurozone banks, which will mitigate any potential risks arising from Italian banks' exposure to market turbulence. In this context, we also note that the large and expanding retail funding base significantly reduces Italian banks' refinancing needs and provides them with a stable financing source.

Malta

We have revised our economic risk trend for Malta to negative from stable. Given the small and open nature of the Maltese economy, which is dominated by sectors such as tourism and services exports such as logistics and e-gaming, we expect the COVID–19 pandemic will undermine growth. Its key export markets are in the euro area and, in particular, countries such as the U.K., Italy, and Germany. This makes Malta vulnerable to the effects of a sharper economic slowdown in the eurozone, especially considering tourism activity will likely be depressed for some time.

After several years of residential property price rises supported by increasing tourism demand, we think there is now increasing risk of a correction. Coupled with banks' high exposure to real estate, at about 65% of lending including housing loans, this poses risks to the banking sector's long-term operating performance if the correction is prolonged. In our view, this will delay the recovery of nonperforming loans (NPLs) seen in recent years, with the system NPL ratio now expected to rise above 7% from 4.6% in 2019 and credit costs to soar to 0.9% in 2020. Steps taken by the government and the central bank could provide some support to the affected businesses and households and should provide some respite. Forbearance measures could delay the recognition of NPLs to 2021, leading us to expect further increases that year.

Netherlands

We have revised our economic risk trend for the Netherlands to negative from stable. We believe the COVID-19 pandemic is lowering the earnings prospects for all banks in the region. This stems from corporates' and SMEs' impaired ability to repay debt, as well as constrained household incomes. Benelux economies, despite their differences, are similar in that they are very open, and therefore largely dependent on the situation of their main European partners. Exports of goods and services represent more than 80% of GDP in the Netherlands.

We expect the COVID-19 pandemic to cause a severe recession in the Netherlands in 2020. While we anticipate a recovery in 2021, it will not immediately and entirely offset the damage caused to the economy, household wealth, and various corporate sectors.

Oman

We have revised our BICRA for Oman to Group '7' from Group '6', and our industry risk score to '6' from '5'. The change in our views on systemic risks in Oman follows the sharp drop in oil prices and reduced economic activity due to the COVID-19 pandemic. We believe these factors will significantly hamper Oman's economy. We expect the asset-quality indicators of the Omani banking system will deteriorate and the cost of risk will increase, weighing on banks' profitability in the next 12-24 months. We believe the Omani government's capacity to provide guarantees and liquidity in a timely manner, should the need arise, has reduced. To counter the impact of COVID-19, the central bank of Oman has implemented certain measures such as lowering the capital-conservation buffers and increasing the lending/financing ratio. We believe these measures will help maintain the liquidity of the banking system.

With the aforementioned changes, we have also revised our industry risk trend for Oman to stable from negative. We have revised our government support assessment for Oman to uncertain from supportive. High fiscal and current account deficits have eroded the government's traditional net asset positions, in turn weakening its ability to extend ongoing and extraordinary support to Omani banks. As a result, we now assess the capacity and willingness of Oman to support failing domestic banks during a crisis as uncertain.

Poland

We have revised our economic risk trend for Poland to negative from stable. The COVID-19 economic shutdown in Poland is likely to cause a recession that will abruptly halt the recent strong pace of real GDP growth in 2020. We expect a GDP contraction of 4% in 2020, followed by a U-shaped recovery with a rebound in GDP of 5% in 2021, so that GDP per capita will revert to $15,000 by 2022. In our view, the comparably lower wealth level in Polish society, which includes below-average saving rates and a moderate social security system compared with many of its peers, means that the private sector's debt capacity is under pressure. We expect a significant increase in the unemployment rate, coupled with an elevated level of consumer loans in the Polish banking system, may cause NPLs to spike from the pre-pandemic average of about 7%. We think that our current assessment of the economic risk for Polish banks may not sufficiently buffer the risks.

Slovenia

We have revised our economic risk trend for Slovenia to stable from positive. In our view, income convergence with the eurozone average and improvements in asset quality will be delayed by the COVID-19-related deterioration in economic conditions. Therefore, we no longer expect Slovenia to meet all the conditions for a better economic risk assessment in the medium term. We consider that our current assessment of risks for the Slovenian banking system can withstand the difficult operating conditions. We take into account strong deleveraging and improvements in asset quality in the private sector in recent years. Additionally, we regard banks' capitalization and profitability as solid, and we anticipate that these will provide adequate buffers to absorb higher risk costs and pressures on revenue. We also expect the liquidity stress that originated from the mandatory loan moratorium and increased loan extension will be manageable for Slovenian banks, given their solid liquidity buffers and the central bank's support measures.

South Africa

We have revised our BICRA for South Africa to Group '6' from Group '5', and our economic risk score to '7' from '6'. We expect South Africa's already contracting economy will face a further sharp COVID-19-related downturn in 2020, and that the pandemic will create additional and more substantial headwinds to GDP growth due to a strict domestic lockdown, a markedly weaker external demand outlook, and tighter credit conditions. Global market dislocations led to massive portfolio outflows in first-quarter 2020 and caused the South African rand to weaken. The combined effect of uncertainties linked to COVID-19 and the expected exit of South Africa bonds from the FTSE Russell WGI index in May 2020, will likely lead to sustained portfolio flow volatility through 2020.

We anticipate the banking sector will contract as a result of the economic recession. We forecast credit to the private sector will shrink by about 5% in 2020, while we expect very low-single-digit growth in 2021. We expect sector credit losses will rise to about 1.8% in 2020, mostly affecting retail and SME loans. Domestic households pose a significant source of risk for banks because of their relatively high leverage and low wealth levels compared with other emerging markets. Household leverage (defined as household debt to disposable income) averaged 72% in the past three years. Household debt metrics, including affordability, will come under pressure in 2020. This is despite lower interest rates due to external shocks and the economic recession. In addition, we expect stress in the commercial real estate sector on the back of a prolonged economic lockdown and the gradual reopening of the economy.

Spain

We have revised our economic risk trend for Spain to negative from stable due to the much more challenging economic environment that Spanish banks will face over the next couple of years. Until the start of March, Spanish banks were fully engaged with the same two key themes that have been paramount in recent years: strengthening balance sheets and focusing on improving returns amid relatively benign economic conditions; and identifying how to refine business and operating models in the face of the looming risks and opportunities of the digital era.

For the short term at least, the COVID-19 pandemic has changed (almost) everything. In addition to the human cost, large parts of economic activity in Spain have ground to a halt. With isolation strategies still very much in force (Spain is heading for a two-month lockdown) our economists expect a sharp economic contraction in the second quarter of 2020, followed by a rebound starting in the third quarter. However, they are now more cautious on the strength of recovery through end-2020 and into 2021, envisaging that GDP in Spain will contract by 8.8% in 2020 and expand by 5.1% in 2021. It will take time for some sectors that are relevant for the Spanish economy, such as tourism, to recover, while the comparatively higher share of temporary workers in Spain will probably lead to a greater increase in the number of unemployed compared with other countries. Indeed, we forecast unemployment to increase to 16.4% by end-2020, up from 14.1% in 2019, and barely changing in 2021.

Tunisia

We have revised our BICRA for Tunisia to Group '10' from Group '9', and our economic risk score to '10' from '8'. We think Tunisia will experience a sharp recession in 2020 as COVID-19 restrictions put pressure on economic activity both in Tunisia and globally. We also think tourism and hospitality, which represent an important share of the Tunisian economy, will likely be among the most affected sectors because of internal and external restrictions. Transport and export-oriented industries, on which the economy is highly dependent, will also suffer as a result of the expected recession in Europe, Tunisia's main trading partner.

The Tunisian authorities announced a Tunisian dinar 2.5 billion ($0.7 billion) emergency plan, lowered the interest rate, and announced further monetary policy easing while introducing payment moratoriums (between three and six months), among other measures. However, we think this will only partly alleviate the stress to the private sector and households over the coming months. Under such conditions, we think the real estate sector, which has already faced price softening since 2016, will severely suffer from an abrupt correction of prices in real terms over the coming quarters as increasing unemployment dampens domestic demand and the global recession reduces external demand from Tunisian expatriates. Overall, we think pressure in all sectors of the economy, excluding food retailers and health-related businesses, will significantly weaken Tunisian banks' asset quality indicators, profitability, and ultimately capitalization in 2020-2022. With the aforementioned changes, we have also revised our economic risk trend for Tunisia to stable from negative.

Turkey

We have revised our industry risk trend for Turkey to negative from stable. We believe banks might suffer from the general decrease in confidence of both international investors and domestic depositors. The former are becoming increasingly risk averse, and this might affect banks' ability to roll over their external debt. The latter could increasingly convert their savings into foreign currency, adding to the pressure on the banking sector. Both residents and nonresidents in Turkey are allowed to hold deposits in foreign currencies; this exposes banks to higher risks during periods when the lira's value is depreciating.

United Arab Emirates

We have revised both our economic risk trend and our industry risk trend for the United Arab Emirates (UAE) to negative from stable. The drop in oil prices and lower economic activity due to COVID-19 will lead to a rise in problem loans and the cost of risk for banks in the UAE in the next 12-24 months. We view favorably the UAE Central Bank's recently announced Targeted Economic Support Scheme, which should help to ease commercial enterprises' financial positions. However, alongside increased forbearance, this could delay the full recognition of asset quality deterioration at UAE banks. Moreover, we note the relaxation of certain prudential requirements; for example, the cap on real estate exposures and the increase in loan-to-value limits, and see some risks of lower recognition and disclosure of problematic assets. We also see the risk of a potential weakening of transparency in the recognition and disclosure of problematic assets.

U.K.

We have revised our economic risk trend for the U.K. to negative from stable. We expect systemwide domestic loan losses to be a key indicator of the evolution of this negative trend. Specifically, we estimate that the domestic loan loss rate could rise to 100 bps in 2020, which would be around five times the level we have observed in each of the past six years. We assume that in 2021, on the back of the economic recovery, the systemwide loss rate would fall to around 67 bps, which we judge to be closer to, but still slightly above, the long-run U.K. average. We form these estimates after taking into account the U.K.'s fiscal and monetary countermeasures, and by balancing our economic forecasts with Bank of England stress test data and actual stressed loss data that we have observed over the past 30 years. While the loan loss rate is an important indicator of asset quality stress in the banking system, we will also take into account the pace and strength of the economic recovery, among other factors.

Uzbekistan

We have revised our economic risk trend for Uzbekistan to negative from stable. In our view, the economic and financial consequences of the COVID-19 outbreak will have a negative impact on Uzbekistan's economy and test the resilience of its banks. We have revised down our 2020 base-case GDP growth forecast for Uzbekistan. We now expect the economy to grow by only 1% (down from 5.5% previously), reflecting the hit to domestic and external demand from COVID-19 containment measures. We believe that Uzbekistan's economy will absorb the current shocks and will likely return to growth at 5% on average in 2021-2022. At the same time, the downside risks in our base-case forecast remain. What COVID-19 means for economic outcomes remains unclear, and could be worse than we currently assume. The speed of the recovery will also depend on policy measures to cushion the blow and limit economic dislocation, and to support the economy and households.

Chart 1

image

About 60% of all outlooks on bank ratings in EMEA are stable, only 3% are positive, and almost 36% are now negative. In Western Europe, almost 50% of ratings have stable outlooks, with negative outlooks accounting for almost 47% of ratings, and positive outlooks accounting for nearly 3% of all ratings. For emerging market banks in EMEA, about 77% of ratings have stable outlooks, with negative outlooks accounting for nearly 20% of ratings, and positive outlooks accounting for nearly 2% of all ratings.

Chart 2

image

Table 2

Ratings Component Scores: Top 50 European Banks
Institution Operating company long-term ICR/outlook Anchor Business position Capital and earnings Risk position Funding and liquidity SACP/ GCP Type of support Number of notches support Additional factor adjustment
Austria
Erste Group Bank AG A/Stable bbb+ Strong Adequate Adequate Above Avg/Strong a None 0 0
Raiffeisen Bank International AG A-/Negative bbb+ Adequate Adequate Adequate Above Avg/Strong a- None 0 0
Belgium
Belfius Bank SA/NV A-/Stable a- Adequate Strong Moderate Avg/Adequate a- None 0 0
KBC Bank N.V. A+/Stable bbb+ Strong Strong Adequate Avg/Adequate a ALAC 1 0
Denmark
Danske Bank A/S A/Stable bbb+ Strong Strong Moderate Avg/Adequate a- ALAC 2 -1
Nykredit Realkredit A/S A+/Stable bbb+ Adequate Strong Adequate Avg/Adequate a- ALAC 2 0
Finland
Nordea Bank Abp AA-/Negative a- Strong Strong Adequate Avg/Adequate a+ ALAC 1 0
OP Corporate Bank PLC AA-/Negative a- Strong Very strong Moderate Avg/Adequate a+ ALAC 1 0
France
BNP Paribas S.A. A+/Negative bbb+ Very Strong Adequate Adequate Avg/Adequate a ALAC 1 0
BPCE S.A. A+/Negative bbb+ Strong Strong Adequate Avg/Adequate a ALAC 1 0
Credit Mutuel Group A/Negative bbb+ Strong Strong Adequate Avg/Adequate a None 0 0
Credit Agricole S.A. A+/Negative bbb+ Strong Adequate Strong Avg/Adequate a ALAC 1 0
La Banque Postale A/Stable bbb+ Adequate Adequate Moderate Above Avg/Strong bbb+ Group 2 0
Societe Generale A/Negative bbb+ Adequate Adequate Adequate Avg/Adequate bbb+ ALAC 2 0
Germany
Commerzbank AG BBB+/Negative a- Moderate Adequate Moderate Avg/Adequate bbb ALAC 1 0
Cooperative Banking Sector Germany AA-/Negative a- Strong Strong Adequate Above Avg/Strong aa- None 0 0
Deutsche Bank AG BBB+/Negative bbb+ Adequate Adequate Moderate Avg/Adequate bbb ALAC 2 -1
Hamburg Commercial Bank AG BBB/Negative a- Weak Strong Moderate Below Avg/Adequate bbb- ALAC 2 -1
Sparkassen-Finanzgruppe Hessen-Thueringen A/Negative a- Adequate Strong Adequate Avg/Adequate a None 0 0
Volkswagen Bank GmbH A-/Negative a- Weak Very strong Adequate Avg/Adequate a- None 0 0
Greece
Alpha Bank A.E. B/Stable b+ Adequate Moderate Adequate Avg/Moderate b None 0 0
National Bank of Greece S.A. B/Stable b+ Adequate Weak Adequate Avg/Moderate b None 0 0
Piraeus Bank S.A. B-/Stable b+ Adequate Weak Moderate Avg/Moderate b- None 0 0
Ireland
AIB Group§ BBB+/Negative bbb Adequate Strong Moderate Avg/Adequate bbb ALAC 1 0
Bank of Ireland Group PLC§ A-/Negative bbb Adequate Strong Moderate Avg/Adequate bbb ALAC 2 0
Italy
Intesa Sanpaolo SpA BBB/Negative bbb- Strong Moderate Strong Avg/Adequate bbb None 0 0
Mediobanca SpA BBB/Negative bbb- Adequate Adequate Strong Avg/Adequate bbb None 0 0
UBI Banca SpA BBB-/Watch Pos bbb- Strong Moderate Adequate Avg/Adequate bbb- None 0 0
UniCredit SpA BBB/Negative bbb Strong Adequate Moderate Avg/Adequate bbb None 0 0
Netherlands
ABN AMRO Bank N.V. A/Negative bbb+ Adequate Strong Adequate Avg/Adequate a- ALAC 1 0
Cooperatieve Rabobank U.A. A+/Negative bbb+ Strong Strong Adequate Avg/Adequate a ALAC 1 0
ING Bank N.V. A+/Stable bbb+ Strong Strong Adequate Avg/Adequate a ALAC 1 0
Norway
DNB Bank ASA AA-/Stable a- Strong Strong Adequate Avg/Adequate a+ ALAC 1 0
Spain
Banco Bilbao Vizcaya Argentaria S.A. A-/Negative bbb Strong Adequate Strong Avg/Adequate a- None 0 0
Banco de Sabadell S.A. BBB/Negative bbb Adequate Adequate Adequate Avg/Adequate bbb None 0 0
Banco Santander S.A. A/Negative bbb Very Strong Adequate Strong Avg/Adequate a None 0 0
Bankia S.A. BBB/Stable bbb Adequate Adequate Adequate Avg/Adequate bbb None 0 0
CaixaBank S.A. BBB+/Stable bbb Strong Adequate Adequate Avg/Adequate bbb+ None 0 0
Sweden
Skandinaviska Enskilda Banken AB A+/Stable a- Adequate Strong Adequate Avg/Adequate a ALAC 1 0
Svenska Handelsbanken AB AA-/Stable a- Strong Strong Adequate Avg/Adequate a+ ALAC 1 0
Swedbank AB A+/Stable a- Strong Strong Moderate Avg/Adequate a ALAC 1 0
Switzerland
Credit Suisse Group AG§ A+/Stable a- Adequate Strong Moderate Avg/Adequate a- ALAC 2 0
UBS Group AG§ A+/Stable a- Strong Strong Moderate Avg/Adequate a ALAC 1 0
Zuercher Kantonalbank AAA/Stable a- Strong Very Strong Adequate Avg/Strong aa- GRE 3 0
U.K.
Barclays PLC§ A/Negative bbb+ Adequate Strong Moderate Avg/Adequate bbb+ ALAC 2 0
HSBC Holdings PLC§ A+/Stable bbb+ Strong Adequate Strong Above Avg/Adequate a ALAC 1 0
Lloyds Banking Group PLC§ A+/Negative bbb+ Strong Adequate Adequate Avg/Adequate a- ALAC 2 0
Nationwide Building Society A/Stable bbb+ Adequate Strong Adequate Avg/Adequate a- ALAC 2 -1
The Royal Bank of Scotland Group PLC§ A/Negative bbb+ Adequate Adequate Adequate Avg/Adequate bbb+ ALAC 2 0
Standard Chartered PLC§ A/Stable bbb+ Adequate Strong Moderate Above Avg/Strong a- ALAC 1 0
Source: S&P Global Ratings; data as of July 23, 2020. In the "Type of Support" column, "None" includes some banks where ratings uplift because of support factors may be possible but none is currently included. For example, this column includes some systemically important banks where systemic importance results in no rating uplift. §Holding company; the rating reflects that on the main operating company. ICR--Issuer credit rating. GRE--Government-related entity. SACP--Stand-alone credit profile. ALAC--Additional loss-absorbing capacity. GCP--Group credit profile. Sov--Government support.

Table 3

Ratings Component Scores: Top 25 CEEMEA Banks
Institution Operating company long-term ICR/outlook Anchor Business position Capital and earnings Risk position Funding and liquidity SACP/ GCP Type of support Number of notches support Additional factor adjustment
Bahrain
Ahli United Bank B.S.C. BBB/Positive bb+ Strong Adequate Adequate Above Avg/Strong bbb None 0 0
Arab Banking Corp. B.S.C. BBB-/Stable bbb- Adequate Strong Adequate Below Avg/Adequate bbb- None 0 0
Israel
Bank Hapoalim B.M. A/Stable bbb+ Strong Strong Moderate Avg/Adequate a- Sov 1 0
Bank Leumi le-Israel B.M. A/Stable bbb+ Strong Strong Moderate Avg/Adequate a- Sov 1 0
Israel Discount Bank Ltd. BBB+/Stable bbb+ Adequate Adequate Moderate Avg/Adequate bbb Sov 1 0
Jordan
Arab Bank PLC B+/Stable bb Strong Adequate Moderate Above Avg/Strong bb+ None 0 -3
Kuwait
National Bank of Kuwait S.A.K. A/Stable bbb Strong Strong Adequate Avg/Adequate a- Sov 1 0
Qatar
Qatar National Bank (Q.P.S.C.) A/Stable bbb- Strong Adequate Adequate Avg/Adequate bbb GRE 3 0
Qatar Islamic Bank (Q.P.S.C.) A-/Stable bbb- Adequate Strong Moderate Avg/Adequate bbb- Sov 3 0
The Commercial Bank (P.S.Q.C.) BBB+/Stable bbb- Adequate Strong Weak Avg/Adequate bb+ Sov 3 0
Russia
VTB Bank JSC BBB-/Stable bb- Strong Weak Adequate Avg/Adequate bb- GRE 3 0
Gazprombank JSC BB+/Stable bb- Strong Weak Adequate Avg/Adequate bb- GRE 2 0
Alfa-Bank JSC BB+/Stable bb- Strong Adequate Strong Avg/Adequate bb+ None 0 0
Oman
BankMuscat S.A.O.G. BB-/Negative bb Strong Adequate Adequate Avg/Adequate bb+ None 0 -2
Saudi Arabia
The National Commercial Bank BBB+/Stable bbb Strong Strong Moderate Avg/Adequate bbb+ None 0 0
Al Rajhi Bank BBB+/Stable bbb Adequate Strong Adequate Avg/Adequate bbb+ None 0 0
Samba Financial Group BBB+/Stable bbb Adequate Strong Adequate Avg/Adequate bbb+ None 0 0
Riyad Bank BBB+/Stable bbb Adequate Strong Adequate Avg/Adequate bbb+ None 0 0
Banque Saudi Fransi BBB+/Stable bbb Adequate Strong Moderate Avg/Adequate bbb Sov 1 0
Arab National Bank BBB+/Stable bbb Adequate Strong Moderate Avg/Adequate bbb Sov 1 0
The Saudi Investment Bank BBB/Stable bbb Moderate Strong Moderate Avg/Adequate bbb- Sov 1 0
Turkey
Turkiye Is Bankasi AS B+/Negative b+ Adequate Weak Adequate Avg/Adequate b+ None 0 0
United Arab Emirates
Mashreqbank A-/Negative bbb- Adequate Strong Adequate Avg/Adequate bbb Sov 2 0
First Abu Dhabi Bank P.J.S.C. AA-/Negative bbb- Strong Strong Strong Avg/Strong a- GRE 2 1
Abu Dhabi Commercial Bank PJSC A/Negative bbb- Strong Strong Adequate Avg/Adequate bbb+ GRE 2 0
Source: S&P Global Ratings; data as of July 23, 2020. CEEMEA--Central and Eastern Europe, Middle East, and Africa. In the "Type of Support" column, "None" includes some banks where ratings uplift because of support factors may be possible but none is currently included. For example, this column includes some systemically important banks where systemic importance results in no rating uplift. ICR--Issuer credit rating. GRE--Government-related entity. SACP--Stand-alone credit profile. ALAC--Additional loss-absorbing capacity. GCP--Group credit profile. Sov--Government support.

Recent Rating Actions: EMEA Banks

Table 4

Recent Rating Actions: EMEA Banks
Date of action Bank Country To From
22/07/2020 KCB Bank Kenya Ltd. Kenya NR B+/Negative/B
22/07/2020 KCB Bank Kenya Ltd. Kenya B+/Negative/B B+/Stable/B
17/07/2020 Gulf Bank Kuwait A-/Negative/A-2 A-/Stable/A-2
17/07/2020 VP Bank AG Liechtenstein A/Negative/A-1 A/Stable/A-1
16/07/2020 Ahli United Bank B.S.C. Bahrain BBB/Positive/A-2 BBB/Watch Pos/A-2
02/07/2020 Bank RBK JSC Kazakhstan NR B-/Stable/B
24/06/2020 Muganbank OJSC Azerbaijan CCC+/Negative/C B-/Watch Neg/B
24/06/2020 Europe Arab Bank PLC Jordan BB+/Negative/B BB+/Stable/B
09/06/2020 Uzpromstroybank Uzbekistan BB-/Negative/B BB-/Stable/B
09/06/2020 National Bank For Foreign Economic Activity Of The Republic Of Uzbekistan Uzbekistan BB-/Negative/B BB-/Stable/B
09/06/2020 KDB Bank Uzbekistan JSC Uzbekistan BB-/Negative/B BB-/Stable/B
09/06/2020 Ipoteka Bank JSCM Uzbekistan BB-/Negative/B BB-/Stable/B
26/05/2020 Nova Ljubljanska Banka D.D. Slovenia BBB-/Negative/A-3 BBB-/Stable/A-3
21/05/2020 DEPObank - Banca Depositaria Italiana S.p.A. Italy BB-/Watch Pos/B BB-/Stable/B
19/05/2020 The Mortgage Society of Finland Finland BBB/Negative/A-2 BBB/Stable/A-2
19/05/2020 OP Corporate Bank PLC Finland AA-/Negative/A-1+ AA-/Stable/A-1+
19/05/2020 Oma Savings Bank PLC Finland BBB+/Negative/A-2 BBB+/Stable/A-2
19/05/2020 Central Bank of Savings Banks Finland PLC Finland A-/Negative/A-2 A-/Stable/A-2
19/05/2020 Bonum Bank PLC Finland BBB/Negative/A-2 BBB/Stable/A-2
19/05/2020 Bank of Aland PLC Finland BBB/Negative/A-2 BBB/Stable/A-2
19/05/2020 Aktia Bank PLC Finland A-/Negative/A-2 A-/Stable/A-2
16/05/2020 Komercni Banka A.S. Czech Republic A/Negative/A-1 A/Stable/A-1
16/05/2020 Societe Generale France A/Negative/A-1 A/Stable/A-1
13/05/2020 HSBC Bank PLC United Kingdom A+/Stable/A-1 AA-/Negative/A-1+
13/05/2020 HSBC Holdings PLC United Kingdom A-/Stable/A-2 A/Negative/A-1
12/05/2020 LGT Bank AG Liechtenstein A+/Stable/A-1 A+/Positive/A-1
07/05/2020 African Bank Ltd. South Africa B/Stable/B B+/Negative/B
07/05/2020 Capitec Bank Ltd. South Africa BB-/Stable/B BB/Negative/B
07/05/2020 FirstRand Bank Ltd. South Africa BB-/Stable/B BB/Negative/B
07/05/2020 Investec Bank Ltd. South Africa BB-/Stable/B BB/Negative/B
06/05/2020 Arab Tunisian Bank Tunisia B-/Stable/B B/Negative/B
06/05/2020 BH Bank Tunisia B-/Stable/B B/Negative/B
06/05/2020 Banque Tuniso-Koweitienne Tunisia CCC+/Watch Dev/-- B/Watch Neg/--
06/05/2020 Israel Discount Bank Ltd. Israel BBB+/Stable/A-2 BBB+/Positive/A-2
06/05/2020 MUFG Bank (Europe) N.V. Netherlands A/Stable/A-1 A/Positive/A-1
04/05/2020 UniCredit Bank AO Russia BBB-/Negative/A-3 BBB-/Stable/A-3
04/05/2020 Zagrebacka banka dd Croatia BBB-/Negative/-- BBB-/Stable/--
30/04/2020 Nordea Bank Abp Finland AA-/Negative/A-1+ AA-/Stable/A-1+
29/04/2020 UniCredit SpA Italy BBB/Negative/A-2 BBB/Stable/A-2
29/04/2020 Erste Group Bank AG Austria A/Stable/A-1 A/Positive/A-1
29/04/2020 Ceska Sporitelna, a.s. Czech Republic A/Stable/A-1 A/Positive/A-1
29/04/2020 HYPO NOE Landesbank fur Niederosterreich und Wien AG Austria A/Stable/A-1 A/Positive/A-1
29/04/2020 Oberbank AG Austria A/Negative/A-1 A/Stable/A-1
29/04/2020 Raiffeisen Bank International AG Austria A-/Negative/A-2 A-/Stable/A-2
29/04/2020 Hypo Tirol Bank AG Austria A/Negative/A-1 A/Stable/A-1
29/04/2020 Oberoesterreichische Landesbank AG Austria A+/Negative/A-1 A+/Stable/A-1
29/04/2020 Hypo Vorarlberg Bank AG Austria A+/Negative/A-1 A+/Stable/A-1
29/04/2020 Abanca Corporacion Bancaria S.A Spain BB+/Negative/B BB+/Stable/B
29/04/2020 Banco Santander S.A. Spain A/Negative/A-1 A/Stable/A-1
29/04/2020 Santander Consumer Bank AG Germany A-/Negative/A-2 A-/Stable/A-2
29/04/2020 Santander Consumer Finance S.A. Spain A-/Negative/A-2 A-/Stable/A-2
29/04/2020 Banco de Sabadell S.A. Spain BBB/Negative/A-2 BBB/Stable/A-2
29/04/2020 Ibercaja Banco S.A. Spain BB+/Negative/B BB+/Stable/B
28/04/2020 First Heartland Jusan Bank JSC Kazakhstan B/Stable/B B-/Positive/B
28/04/2020 Al Baraka Banking Group B.S.C. Bahrain BB-/Stable/B BB/Negative/B
28/04/2020 SB Alfa-Bank JSC Kazakhstan BB-/Stable/B BB-/Positive/B
28/04/2020 AIB Group PLC Ireland BBB-/Negative/A-3 BBB-/Stable/A-3
28/04/2020 AIB Group (U.K.) PLC United Kingdom BBB/Negative/A-2 BBB/Stable/A-2
28/04/2020 Allied Irish Banks PLC Ireland BBB+/Negative/A-2 BBB+/Stable/A-2
28/04/2020 Bank of Ireland Group PLC Ireland BBB-/Negative/A-3 BBB-/Stable/A-3
28/04/2020 Bank of Ireland Ireland A-/Negative/A-2 A-/Stable/A-2
28/04/2020 Permanent TSB Group Holdings PLC Ireland BB-/Negative/B BB-/Stable/B
28/04/2020 Permanent TSB PLC Ireland BBB-/Negative/A-3 BBB-/Stable/A-3
28/04/2020 Bank RBK JSC Kazakhstan B-/Stable/B B-/Positive/B
28/04/2020 Kapital Bank OJSC Azerbaijan BB-/Stable/B BB-/Positive/B
28/04/2020 Muganbank OJSC Azerbaijan B-/Watch Neg/B B-/Stable/B
27/04/2020 Hamkorbank JSCB Uzbekistan B+/Stable/B B+/Positive/B
27/04/2020 Orient Finans Bank Uzbekistan B/Stable/B B/Positive/B
27/04/2020 Davr-Bank Uzbekistan B-/Stable/B B-/Positive/B
27/04/2020 Ravnaq-bank Private Open Joint-Stock Commercial Bank Uzbekistan B-/Negative/B B-/Stable/B
27/04/2020 Turkiston Bank Uzbekistan B-/Negative/B B-/Stable/B
27/04/2020 Alior Bank S.A. Poland BB/Negative/B BB/Stable/B
27/04/2020 Banco Santander Totta S.A. Portugal BBB/Stable/A-2 BBB/Positive/A-2
27/04/2020 mBank Poland BBB/Negative/A-2 BBB/Negative/A-2
24/04/2020 Arion Bank Iceland BBB/Stable/A-2 BBB+/Negative/A-2
24/04/2020 Islandsbanki hf Iceland BBB/Stable/A-2 BBB+/Negative/A-2
24/04/2020 Landsbankinn hf. Iceland BBB/Stable/A-2 BBB+/Negative/A-2
23/04/2020 ING Groep N.V. France A-/Negative/A-2 A-/Stable/A-2
23/04/2020 BNP Paribas France A+/Negative/A-1 A+/Stable/A-1
23/04/2020 BPCE France A+/Negative/A-1 A+/Stable/A-1
23/04/2020 Caisse Centrale du Credit Mutuel France A/Negative/A-1 A/Stable/A-1
23/04/2020 Credit Agricole S.A. France A+/Negative/A-1 A+/Stable/A-1
23/04/2020 Bank of Valletta PLC Malta BBB-/Negative/A-3 BBB-/Stable/A-3
23/04/2020 Argenta Spaarbank N.V. Belgium A-/Negative/A-2 A-/Stable/A-2
23/04/2020 Cooperatieve Rabobank U.A. Netherlands A+/Negative/A-1 A+/Stable/A-1
23/04/2020 De Volksbank N.V. Netherlands A-/Stable/A-2 A-/Positive/A-2
23/04/2020 KBC Group N.V. Belgium A-/Negative/A-2 A-/Stable/A-2
23/04/2020 NIBC Bank N.V. Netherlands BBB+/Negative/A-2 BBB+/Stable/A-2
24/04/2020 Van Lanschot Kempen Wealth Management N.V. Netherlands BBB+/Negative/A-2 BBB+/Stable/A-2
23/04/2020 Commerzbank AG Germany BBB+/Negative/A-2 A-/Negative/A-2
23/04/2020 Deutsche Bank AG Germany BBB+/Negative/A-2 BBB+/Stable/A-2
23/04/2020 S-Finanzgruppe Hessen-Thueringen Germany A/Negative/A-1 A/Stable/A-1
23/04/2020 Grenke AG Germany BBB+/Negative/A-2 BBB+/Stable/A-2
23/04/2020 Virgin Money UK PLC United Kingdom BBB-/Negative/A-3 BBB-/Stable/A-3
23/04/2020 NatWest Markets Plc United Kingdom A-/Negative/A-2 A-/Stable/A-2
23/04/2020 Ulster Bank Ireland DAC Ireland A-/Negative/A-2 A-/Stable/A-2
23/04/2020 The Royal Bank of Scotland Group plc United Kingdom BBB/Negative/A-2 BBB/Stable/A-2
23/04/2020 Royal Bank of Scotland International Limited United Kingdom A-/Negative/A-2 A-/Stable/A-2
23/04/2020 Nationwide Building Society United Kingdom A/Stable/A-1 A/Positive/A-1
23/04/2020 Lloyds Bank Corporate Markets PLC United Kingdom A/Negative/A-1 A/Stable/A-1
23/04/2020 Lloyds Banking Group PLC United Kingdom BBB+/Negative/A-2 BBB+/Stable/A-2
23/04/2020 Barclays Bank UK PLC United Kingdom A/Negative/A-1 A/Stable/A-1
23/04/2020 Barclays PLC United Kingdom BBB/Negative/A-2 BBB/Stable/A-2
23/04/2020 Santander UK Group Holdings PLC United Kingdom BBB/Negative/A-2 BBB/Stable/A-2
22/04/2020 Kazakh Agrarian Credit Corp. Kazakhstan NR BB/Stable/B
16/04/2020 My Money Bank France BBB-/Negative/A-3 BBB-/Stable/A-3
15/04/2020 PSA Banque France France BBB+/Negative/A-2 BBB+/Stable/A-2
10/04/2020 Cartu Bank JSC Georgia B/Negative/B B/Stable/B
10/04/2020 Liberty Bank JSC Georgia B/Stable/B B/Positive/B
10/04/2020 Socram Banque France BBB/Negative/A-2 BBB+/Negative/A-2
09/04/2020 ABN AMRO Bank N.V. Netherlands A/Negative/A-1 A/Stable/A-1
08/04/2020 Banco Comercial Portugues S.A. Portugal BB/Stable/B BB/Positive/B
08/04/2020 Haitong Bank S.A. Portugal BB/Negative/B BB/Stable/B
08/04/2020 Bank Polska Kasa Opieki S.A. Poland BBB+/Stable/A-2 BBB+/Positive/A-2
07/04/2020 Kutxabank S.A. Spain BBB/Stable/A-2 BBB/Positive/A-2
03/04/2020 Societe Generale France A/Stable/A-1 A/Positive/A-1
03/04/2020 Komercni Banka A.S. Czech Republic A/Stable/A-1 A/Positive/A-1
31/03/2020 Access Bank PLC Nigeria B-/Stable/B B/Negative/B
31/03/2020 Ecobank Nigeria Ltd. Nigeria B-/Stable/B B/Negative/B
31/03/2020 Guaranty Trust Bank PLC Nigeria B-/Stable/B B/Negative/B
31/03/2020 Stanbic IBTC Bank PLC Nigeria B-/Stable/B B/Negative/B
31/03/2020 United Bank for Africa Plc Nigeria B-/Stable/B B/Negative/B
31/03/2020 Zenith Bank PLC Nigeria B-/Stable/B B/Negative/B
31/03/2020 Eiendomskreditt AS Norway BBB-/Stable/A-3 BBB/Negative/A-2
30/03/2020 GFH Financial Group B.S.C Bahrain B-/Stable/-- B/Stable/--
30/03/2020 BankMuscat S.A.O.G. Oman BB-/Negative/B BB/Negative/B
30/03/2020 Boubyan Bank K.S.C.P. Kuwait A-/Stable/-- A/Stable/--
30/03/2020 National Bank of Kuwait S.A.K. Kuwait A/Stable/A-1 A+/Stable/A-1
30/03/2020 Hamburg Commercial Bank AG Germany BBB/Negative/A-2 BBB/Stable/A-2
27/03/2020 Alpha Bank A.E. Greece B/Stable/B B/Positive/B
27/03/2020 Eurobank Ergasias S.A Greece B/Stable/B B/Positive/B
27/03/2020 National Bank of Greece S.A. Greece B/Stable/B B/Positive/B
27/03/2020 Piraeus Bank S.A. Greece B-/Stable/B B-/Positive/B
27/03/2020 La Banque Postale France A/Stable/A-1 A/Positive/A-1
27/03/2020 FCE Bank PLC United Kingdom BBB-/Watch Neg/-- BBB-/Stable/--
27/03/2020 Swedbank AB Sweden A+/Stable/A-1 AA-/Negative/A-1+
27/03/2020 Abu Dhabi Commercial Bank PJSC United Arab Emirates A/Negative/A-1 A/Stable/A-1
27/03/2020 First Abu Dhabi Bank P.J.S.C. United Arab Emirates AA-/Negative/A-1+ AA-/Stable/A-1+
27/03/2020 Mashreqbank United Arab Emirates A-/Negative/A-2 A-/Stable/A-2
27/03/2020 National Bank of Fujairah PJSC United Arab Emirates BBB+/Negative/A-2 BBB+/Stable/A-2
27/03/2020 Sharjah Islamic Bank United Arab Emirates A-/Negative/A-2 A-/Stable/A-2
26/03/2020 Iccrea Banca SpA Italy BB/Negative/B BB/Stable/B
26/03/2020 Banca Popolare dell'Alto Adige Volksbank S.p.A. Italy BB+/Negative/B BB+/Stable/B
24/03/2020 CentroCredit Bank JSC Russia B/Negative/B B/Stable/B
16/03/2020 Bankmed s.a.l. Lebanon NR SD/SD
12/03/2020 Bank CenterCredit JSC Kazakhstan B/Stable/B B/Negative/B
12/03/2020 Nurbank JSC Kazakhstan B-/Stable/B B-/Negative/B
09/03/2020 Carrefour Banque France BBB+/Negative/A-2 BBB+/Stable/A-2
09/03/2020 Doha Bank Q.P.S.C. Qatar NR BBB+/Stable/A-2
06/03/2020 Turkiye Vakiflar Bankasi TAO Turkey NR B+/Negative/B
03/03/2020 Zenith Bank PLC Nigeria B/Negative/B B/Stable/B
03/03/2020 United Bank for Africa Plc Nigeria B/Negative/B B/Stable/B
03/03/2020 Stanbic IBTC Bank PLC Nigeria B/Negative/B B/Stable/B
03/03/2020 Guaranty Trust Bank PLC Nigeria B/Negative/B B/Stable/B
03/03/2020 Ecobank Nigeria Ltd. Nigeria B/Negative/B B/Stable/B
03/03/2020 Access Bank PLC Nigeria B/Negative/B B/Stable/B
03/03/2020 Raiffeisen Bank International AG Austria A-/Stable/A-2 BBB+/Positive/A-2
NR--Not rated. SD--Selective default. Source: S&P Global Ratings.

This report does not constitute a rating action.

Primary Credit Analyst:Natalia Yalovskaya, London (44) 20-7176-3407;
natalia.yalovskaya@spglobal.com
Secondary Contacts:Elena Iparraguirre, Madrid (34) 91-389-6963;
elena.iparraguirre@spglobal.com
Mohamed Damak, Dubai (971) 4-372-7153;
mohamed.damak@spglobal.com

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