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EMEA Financial Institutions Monitor 2Q2024: Robust Profitability, Resilient Performance
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Global Fund Ratings As Of July 2024


EMEA Financial Institutions Monitor 2Q2024: Robust Profitability, Resilient Performance

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Against the backdrop of a soft landing, EMEA's banks remain buoyant. Supported by solid capital and liquidity buffers, good profitability, and still-sound asset quality, most banks across Europe, the Middle East, and Africa (EMEA) are showing sturdy performance and creditworthiness. At the same time, S&P Global Ratings expects asset quality indicators to weaken a little, reflecting increasing pressure on small and midsize entities (SMEs), companies operating in the commercial real estate (CRE) segment, and unsecured consumer credit. We think this should be manageable for most banks, though. And while we don't expect further growth, we expect banks to report solid profits in 2024. Earnings upside likely peaked last year, and lending growth remains muted in Europe. The focus on managing costs is becoming even more important as business growth volumes remain muted.

While we expect EMEA banks to maintain their strong performance, we see three main risks to our baseline assumptions:

  • A protracted, painful recession could undermine the financial health of corporates and households, leading to material asset quality deterioration in the most vulnerable segments.
  • Tighter liquidity, higher funding costs, and market turbulence could unsettle some EMEA banks. For lower-rated banks, higher funding costs might become an issue. In addition, heightened geopolitical risks could increase market turbulence. This could destabilize financial institutions (FIs) with weaker funding profiles, especially nonbank FIs with high refinancing needs, and expose banks to higher counterparty risks.
  • Banks with weak business models might find it difficult to tackle inefficiencies, digitalize their businesses, and sustain cyber resilience.

Positive Rating Actions And Stable Outlooks Persist

Our rating actions on EMEA banks maintained a pronounced positive net bias in 2023 and the first five months of 2024, and 80.4% of ratings have a stable outlook. This supports our view of FIs' likely resilient performance in 2024.

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Solid Capital Positions Despite Growing Shareholder Distributions

Capital and earnings will remain a credit strength for many rated banks in the region. Higher profits, comfortable capital headroom, modest expected balance sheet growth, and the manageable effect of Basel III amendments on banks' capital supported increased distributions to shareholders. Major listed European banks announced over €100 billion in dividends and share repurchases in 2024, a material increase from 2022. Nevertheless, we do not expect these distributions to change our view of banks' capital positions or ratings.

The capital buffers of banks operating in some of the region's emerging markets are, on average, more modest than those of European banks. This doesn't include banks in the Gulf Cooperation Council (GCC) region or Israel, where banks traditionally maintain stronger capital buffers compared to other emerging market institutions. While higher economic risk and stronger growth in lending will continue to limit banks' capital assessments, we expect that solid revenue growth will somewhat offset these issues and enable stable capital positions over the next 12-18 months.

Financing Conditions Remain Supportive For EMEA Banks

Favorable financing conditions reflect positive credit sentiment and investors' search for returns. Banks have been issuing senior debt and successfully replacing their additional Tier 1 (AT1) instruments with upcoming call dates. By the end of 2025, European banks might have to replace up to 30% of outstanding AT1 instruments. A decision to call a hybrid capital instrument at the next call date and refinance it could result in incremental costs. We therefore continue to expect that banks will be weighing this potentially higher cost against the need to maintain good access to their investor base when making a call/noncall decision.

European banks' stable and diversified funding base, with a solid deposit base and good access to domestic and international capital markets, helps them to manage funding costs and maintain satisfactory liquidity. The European Central Bank's (ECB's) new operational framework, announced in March, won't tighten conditions for banks to access central bank liquidity and, in our view, should prove supportive to banks' funding and profitability. The framework does not imply any acceleration in the reduction of the ECB's balance sheet, although it doesn't rule it out either. Importantly, the ECB will supply liquidity to banks on a full allotment basis and against a broad set of collateral at a reduced spread of 15 basis points (bps) above its deposit facility rate, versus 50 bps currently. This will likely limit the volatility on money market rates and leave little room for a strong resurgence in money market transactions, especially unsecured interbank lending.

Monoline CRE Lenders Are More Vulnerable

At about 11% of European banks' total customer lending, and less for most emerging market banks, CRE exposures will likely be manageable overall. We believe that monoline CRE lenders are more vulnerable, though, especially those with substantial exposure to the U.S. CRE market, which faces material pressure. In Europe, we view German and Swedish banking sectors as having the highest CRE exposures, which, for some banks are more than double the banks' common equity Tier 1 capital.

Strategic M&A Deals Appear To Be Gaining Momentum

We see an increased appetite from European banks for strategic acquisitions, provided they are economically attractive, add value in terms of size or capability, and are in the acquiring bank's core markets. This fits in with banks' increased focus on areas where they have competitive advantage or scale, and their withdrawal from businesses or markets that are not considered core.

Several recently announced acquisitions fit this trend: Deutsche Bank (U.K. corporate broker Numis), Barclays (Tesco Bank), HSBC (SVB UK and Citi's Chinese wealth business), Nationwide (Virgin Money), ABN AMRO (Hauck Aufhauser Lampe), and BBVA's tender offer to buy Sabadell. We note also the following exits from certain markets: OTP (from Romania), Svenska Handelsbanken (from Finland), Danske Bank (from Norwegian retail operations), and BNPP (from Czechia). We consider that the modest uplift in banks' valuations last year, large capital buffers, and the incentives to improve efficiency could prompt European banks to persist in their search for strategic acquisitions and divestments in 2024.

Gradually Improving Environment For Emerging Market Banks

The expected soft landing in advanced economies will continue to support credit conditions in emerging markets. For the majority of EMEA emerging markets, we expect continued solid economic growth and disinflation will improve financing conditions for borrowers and support banks' creditworthiness. Financing conditions have been gradually improving for emerging market issuers overall. However, strong activity and inflation data have pushed market expectations for the Fed's first rate cut toward the end of the year instead of the previously expected middle of the year. This, and the upward trend in commodity prices--particularly oil--could disrupt a disinflation trend in emerging markets and slow or delay central banks' interest rate reductions.

The risk of increasing geopolitical tensions and sharper than currently expected downturn in developed economies continue to weigh on growth prospects for emerging markets. This could lead to further disruption in supply chains and the production of key commodities, depress export flows and revenues, and stymie foreign direct investments to emerging markets.

Climate Change Disclosures Are Set To Improve For EU Banks

From 2024, EU banks must disclose their Green Asset Ratio (GAR) in their Pillar 3 reports, showing the share of EU Taxonomy-aligned assets in selected financial assets. Despite certain methodological challenges and complexity related to the GAR calculation, we consider this as a step toward greater transparency. We expect further legislative and regulatory initiatives will follow. These include banks' enhanced disclosure requirements regarding climate risk that will complement information on exposure to sectors vulnerable to transition and physical risks, and greenhouse gas emissions (GHG)-financed emissions. The average GAR of European global systemically important banks (GSIBs) was a low 2.8% as of Dec. 31, 2023, and we think this will gradually increase.

Geopolitical Risks Are Rising

We continue to see heightened geopolitical risks, although these remain indirect and so far limited for the majority of EMEA countries (apart from Israel). As a result, we could see risks relating to the disruption of supply chains and increased energy prices, triggering flight to quality, risk aversion, high volatility, and a temporary financial markets freeze.

The recent attack on Israel by Iran represents a dangerous expansion of the Israel–Hamas war and raises the risk of a sharp escalation of the conflict. The signaling and coordination that minimized harm prevented an immediate full-scale regional conflict. While the recent events signal a significant increase in geopolitical risk, the central narrative of our base-case scenario remains broadly unchanged, including our baseline macroeconomic assumptions for major economies. Nevertheless, our expectations will be contingent on any potential further regional escalation.

Increased Geopolitical Tensions Are Disrupting Israeli Banks' Performance

Israeli banks face weaker economic prospects given the heightened geopolitical tensions in the country. On the back of continued disruption and uncertainty, we expect real GDP growth of around 0.5% in 2024 and quarterly output to remain below pre-war levels throughout 2024. While we expect growth will rebound by 5% in 2025, the Israeli economy could face longer-term damage. An escalation of the conflict could present additional security and social risks for Israel, which could have a deeper impact on the domestic economy.

While we have seen a limited increase in nonperforming loans since the outbreak of the conflict, we consider that the pressure on asset quality has intensified. The increase in recourse to payment deferrals that affected about 3.7% of systemwide loans as of end-March 2024 is an example of this. We consider that tourism-related businesses, SMEs, unsecured lending, and real estate and construction are the most vulnerable sectors. We therefore forecast credit losses will remain elevated, having reached about 50 bps in 2023. We anticipate that banks' resilient profitability will help them cushion the overall negative impact from the weaker economic environment and will continue to support their overall solvency and capital positions. That said, we think that the sector's buffers could be eroded if war escalates as it will lead to a more meaningful asset quality deterioration or materially higher exposure to financial and nonfinancial risks.

Key Banking Sector Risks In EMEA

The table below presents S&P Global Ratings' views about the key risks and risk trends affecting the banking sectors in EMEA where we rate banks. For more information, see 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').

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Selected Research

We recently published several articles highlighting our views on EMEA banking sectors:

Economic, Sovereign, And Other Research

Updated Rating Methodology

BICRA Changes

Over the past two quarters, we made the following changes to our BICRAs.

Armenia

We have revised our economic risk score for Armenia to '7' from '8'. We consider credit risk in the Armenian economy has improved, largely because the share of foreign currency loans in total lending has declined and we expect it to stay subdued. We expect the proportion of foreign currency loans in the Armenian banking system will reduce further over the next few years despite a likely weaker exchange rate. With this change to the economic risk score, we have also revised our economic risk trend for Armenia to stable from positive.

Czech Republic

We have revised our economic risk trend for Czech Republic to stable from negative. Economic activity in the Czech Republic will improve thanks to a recovery of private consumption and business investments. We expect the Czech economy will return to growth in 2024. The disinflation process in the country and ongoing monetary easing will likely contribute to higher household consumption and corporate investments. This improving economic environment will be beneficial to banks. We believe risks to the Czech banking sector are receding. Their high earnings generation capacity and resilient portfolio quality, despite challenging operating conditions over the last 18 months, are proof of structural strengths, in our view.

Iceland

We have revised our BICRA for Iceland to Group '4' from Group '5' and our economic risk score to '4' from '5'. We consider that economic risks facing Icelandic banks have faded with the stabilizing housing market. Residential house price growth has slowed since the mid-2022 peak. The 12-month price inflation fell steeply over 2023 and real prices corrected by 3.5%. Still, underlying demand appears robust and transaction activity has rebounded over recent months, albeit below the pre-pandemic average, resulting in some upward pressure on housing prices. This is partly explained by government measures to support households affected by the volcanic activity on the Reykjanes peninsula and the town of Grindavik, including the government's purchase of 89 new properties for residents in the area. With these changes, we have also revised our economic risk trend for Iceland to stable from positive.

Israel

We have revised our BICRA for Israel to Group '4' from Group '3' and our economic risk score to '4' from '3'. We consider that economic risks for Israeli banks have increased due to the higher geopolitical risk that Israel faces. An escalation of the conflict presents additional security and social risks for Israel, lowering the resiliency of the domestic economy. We think economic prospects remain weak for 2024 and while we expect growth will rebound in 2025 it remains uncertain whether there could be longer-term scarring for the Israeli economy. We expect asset quality to deteriorate, particularly in sectors more affected by the direct and indirect consequences of the war. We forecast credit losses will remain elevated after having reached about 50 bps in 2023. The economic risk trend remains negative. Although we expect strong profitability and good capitalization will help banks to cushion the impact of the more negative environment, we think the sector's buffer could be eroded if the geopolitical scenario further deteriorates if war escalates as it could lead to meaningful asset quality deterioration, particularly in the real estate sector, considerable decline in profitability, or materially higher exposure to financial and nonfinancial risks.

Kazakhstan

We have revised our economic risk score for Kazakhstan to '7' from '8'. We believe the Kazakhstani banking sector has shown better resilience to macroeconomic challenges in recent years, amid exacerbated geopolitical risks in the region. The system's asset quality metrics and financial performance have been significantly better than our expectations. Kazakhstan's banking industry has recovered from a protracted correction and credit risks are now under control. We estimate that systemwide nonperforming loans (NPLs; defined as Stage 3 under International Financial Reporting Standards) are likely to remain broadly stable at about 8% in 2024 versus about 18% in 2020. We expect the recovery will continue and support banking sector operating performance at least through 2024. We forecast retail lending will expand up to 20% in nominal terms in 2024 compared with an average of 25%-30% in 2022-2023. The regulator has signaled that it will keep the fast-growing retail segment under control, and we therefore anticipate a tighter regulatory environment and a gradual cooling of the housing market. We think that retail lending is likely to peak, given base effects and limits on the ability of the household sector to absorb substantially more debt.

We have also revised our industry risk trend for Kazakhstan to positive from stable. We acknowledge that the banking regulator has taken several steps to strengthen banking supervision. These include conducting a systemwide asset quality review in 2019, transition to supervisory review and evaluation process practices, and introducing a number of measures (including variable risk weights for capital adequacy ratios) to limit banks' risk appetites. However, the regulator tends to address problems on a case-by-case basis. Although we observe enhancements in financial oversight, we still consider that Kazakhstan's banking regulator lacks independence and can be subject to political interference. The Kazakhstani banking system has largely resolved the interruption of Russian banking activities in 2022 in an orderly manner through market-based solutions with regulatory support, which helped to avoid a banking crisis and operational disruption. The Kazakhstani regulator supported the banking sector by absorbing the short-term effect of the shock amid a rapid realignment of market structure.

Portugal

We have revised our economic risk score for Portugal to '5' from '6'. We have observed continuous improvement in Portugal's external financial position and public sector indebtedness. For more than a decade, Portugal's private sector has also deleveraged, and its indebtedness is now better aligned with its debt capacity, which reduces credit risk for banks.

We have also revised our industry risk trend for Portugal to positive from stable. This is because deleveraging has also strengthened Portuguese banks' funding profiles, with domestic retail deposits emerging as banks' primary source of funding and reliance on external sources kept at lower levels. Portuguese banks currently hold deposits in excess of loans and thus have minimal reliance on external funding. Indeed, the banking system's net external position turned negative (i.e., banks became external lenders) in 2021 and has remained negative since then. In 2023, Portuguese banks repaid about €7 billion of targeted longer-term refinancing operations to the European Central Bank, of which the remaining balance amounts to about €4.7 billion, and managed to maintain sound liquidity thereafter. Banks have tapped the foreign capital markets only occasionally and primarily to build up their minimum requirement for own funds and eligible liabilities, rather than to fulfill pure funding needs. But we think they could access them if needed. The ongoing improvement of Portugal's sovereign creditworthiness should further support investors' appetite for Portuguese risk, including for Portuguese banks.

Moreover, a favorable interest rate environment and solid efficiency have boosted banks' profitability in Portugal. Portuguese banks' profitability improved notably in 2023, outperforming our expectations. The rapid increase of interest rates pushed up banks' net interest income significantly (banks' net interest margin reached 2.6% in the first nine months of 2023 compared with 1.5% in the first nine months of 2022), given that most lending is at floating rates. Deposits migrated from demand to time deposits to a larger extent than in other countries, but still banks were able to contain the increase in funding costs. In addition, previous years' efforts on the cost side paid off and the efficiency ratio further improved, to an estimated 45% at Sept. 30, 2023, comparing well with that of peers. The containment of the cost of risk at 47 bps also supported banks' bottom lines. As a result, the Portuguese banking system posted a return on average equity of 14.6% for the first nine months of 2023, which compares well with the average 4.5% reported in the past five years, and we think the improvement is sustainable. Indeed, we expect banks' 2024 profitability will remain solid. Finally, previously wide differences in performance among peers have reduced.

Spain

We have revised our industry risk trend for Spain to positive from stable. The return of positive interest rates significantly strengthened Spanish banks' profitability after years in which they could not meet their cost of capital. The rapid increase in interest rates significantly boosted earnings, given Spanish banks' focus on traditional commercial banking, largely floating asset bases, and funding profiles that are weighted toward cheap retail deposits. Banks' profitability also benefited from their strong focus on efficiency in recent years. Spanish banks meaningfully downsized their operating structures organically and through consolidation. Moreover, problem loans and the cost of risk remained contained, despite the rising cost of living and increased financing costs for borrowers. Although the extraordinary tax on revenue imposed by the government has reduced banks' bottom-line profits, it proved to be affordable, given their strong earnings.

Profitability prospects remain solid, in our view. We forecast that interest rates will start to fall from mid-2024, which will put some pressure on earnings. However, we feel confident that Spanish banks will maintain sound returns going forward. Growth prospects for the Spanish economy are sound, and growth will outpace that of European peers. In addition, the private sector has meaningfully reduced leverage over more than a decade, placing households and corporates in a good position, and the country has made progress in correcting external imbalances.

Türkiye

We have revised our economic risk trend for Türkiye to positive from stable. In our base case, we expect economic imbalances to unwind, curbing demand for credit, moderating real estate prices, and slowing the economy, amid rising portfolio inflows and narrowing current account deficits. As a result, we anticipate Turkish banks will face elevated, but manageable credit losses.

We forecast that nominal loan growth will decelerate to about 40% in 2024, indicating a contraction in real terms, which should help curb domestic demand. We expect Türkiye's economic activity to slow over the next two years, so that real GDP growth decreases to 3%, from an average of 5% in 2022-2023. A prolonged period of monetary tightening, combined with better coordination between monetary, fiscal, and income policies, is expected to help gradually rebalance the economy.

Macroeconomic conditions will remain tight for some time, which is likely to erode asset quality for banks. We therefore expect credit losses to reach 190 bps by the end of 2024, up from an estimated 138 bps at end-2023. Nonperforming loans' inflows will increase, but the net effect of that on the NPL ratio will be softened given our expectation that nominal loan growth will remain elevated, banks will continue to restructure loans (while they might not recognize them as delinquent), to sell and write down NPLs.

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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 CRA adjustment SACP/GCP Type of support Number of notches support Additional factors
Austria
Erste Group Bank AG A+/Stable bbb+ Strong (+1) Adequate (0) Adequate (0) Strong/Strong (+1) 0 a ALAC 1 0
Raiffeisen Bank International AG A-/Negative bbb+ Adequate (0) Strong (+1) Moderate (-1) Strong/Strong (+1) 0 a- None 0 0
Belgium
Belfius Bank SA/NV A/Stable a- Adequate (0) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 a- ALAC 1 0
KBC Bank N.V. A+/Stable bbb+ Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a ALAC 1 0
Denmark
Danske Bank A/S A+/Stable bbb+ Strong (+1) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 a- ALAC 2 0
Nykredit Realkredit A/S A+/Stable bbb+ Adequate (0) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a- ALAC 2 0
Finland
Nordea Bank Abp AA-/Stable a- Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a+ ALAC 1 0
France
BNP Paribas S.A. A+/Stable bbb+ Very Strong (+2) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 a ALAC 1 0
BPCE S.A. A/Stable bbb+ Adequate (0) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a- ALAC 1 0
Credit Mutuel Group A+/Stable bbb+ Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a ALAC 1 0
Credit Agricole S.A. A+/Stable bbb+ Strong (+1) Adequate (0) Strong (+1) Adequate/Adequate (0) 0 a ALAC 1 0
La Banque Postale A+/Negative bbb+ Adequate (0) Moderate (-1) Moderate (-1) Strong/Strong (+1) 0 bbb Group 4 0
Société Générale Société anonyme A/Stable bbb+ Adequate (0) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 bbb+ ALAC 2 0
Germany
Commerzbank AG A-/Positive bbb+ Moderate (-1) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 bbb ALAC 2 0
Cooperative Banking Sector Germany A+/Stable bbb+ Strong (+1) Strong (+1) Adequate (0) Strong/Strong (+1) 0 a+ None 0 0
Deutsche Bank AG A/Stable bbb+ Adequate (0) Adequate (0) Moderate (-1) Adequate/Adequate (0) 1 bbb+ ALAC 2 0
Volkswagen Bank GmbH BBB+/Stable bbb+ Constrained (-2) Very Strong (+2) Adequate (0) Adequate/Adequate (0) 0 bbb+ None 0 0
Greece
Alpha Bank S.A. BB-/Positive bb Adequate (0) Constrained (-1) Adequate (0) Adequate/Adequate (0) 0 bb- None 0 0
Eurobank S.A. BB/Positive bb Adequate (0) Constrained (-1) Adequate (0) Adequate/Adequate (0) 1 bb None 0 0
Piraeus Bank S.A. BB-/Positive bb Adequate (0) Constrained (-1) Adequate (0) Adequate/Adequate (0) 0 bb- None 0 0
Ireland
AIB Group PLC§ A/Stable bbb+ Adequate (0) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bbb+ ALAC 2 0
Bank of Ireland Group PLC§ A/Stable bbb+ Adequate (0) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bbb+ ALAC 2 0
Israel
Bank Hapoalim B.M. A-/Negative bbb Strong (+1) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bbb+ Sov 1 0
Bank Leumi le-Israel B.M. A-/Negative bbb Strong (+1) Adequate (0) Moderate (-1) Adequate/Adequate (0) 1 bbb+ Sov 1 0
Italy
Intesa Sanpaolo SpA BBB/Stable bbb- Strong (+1) Adequate (0) Strong (+1) Adequate/Adequate (0) 0 bbb+ None 0 -1
Mediobanca SpA BBB/Stable bbb- Adequate (0) Adequate (0) Strong (+1) Adequate/Adequate (0) 0 bbb None 0 0
Iccrea Banca SpA BBB-/Stable bbb- Adequate (0) Strong (+1) Constrained (-2) Strong/Strong (+1) 0 bbb- None 0 0
UniCredit SpA BBB/Stable bbb Strong (+1) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 bbb+ None 0 -1
Netherlands
ABN AMRO Bank N.V. A/Stable bbb+ Adequate (0) Strong (+1) Adequate (0) Adequate/Adequate (0) -1 bbb+ ALAC 2 0
Cooperatieve Rabobank U.A. A+/Stable bbb+ Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a ALAC 1 0
ING Bank N.V. A+/Stable bbb+ Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a ALAC 1 0
Norway
DNB Bank ASA AA-/Stable a- Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a+ ALAC 1 0
Spain
Banco Bilbao Vizcaya Argentaria S.A. A/Stable bbb Strong (+1) Adequate (0) Strong (+1) Adequate/Adequate (0) 0 a- ALAC 1 0
Banco de Sabadell S.A. BBB+/Positive bbb Adequate (0) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 bbb ALAC 1 0
Banco Santander S.A. A+/Stable bbb Very Strong (+2) Adequate (0) Strong (+1) Adequate/Adequate (0) 0 a ALAC 1 0
CaixaBank S.A. A-/Positive bbb Strong (+1) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 bbb+ ALAC 1 0
Sweden
Skandinaviska Enskilda Banken AB A+/Stable a- Adequate (0) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a ALAC 1 0
Svenska Handelsbanken AB AA-/Stable a- Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a+ ALAC 1 0
Swedbank AB A+/Stable a- Strong (+1) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 a ALAC 1 0
Switzerland
UBS Group AG§ A+/Stable a- Strong (+1) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 a ALAC 1 0
Raiffeisen Schweiz Genossenschaft AA-/Stable a- Adequate (0) Very Strong (+2) Adequate (0) Adequate/Adequate (0) 0 a+ ALAC 1 0
Zuercher Kantonalbank AAA/Stable a- Strong (+1) Very Strong (+2) Adequate (0) Adequate/Strong (0) 0 aa- GRE 3 0
U.K.
Barclays PLC§ A+/Stable bbb+ Strong (+1) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 a- ALAC 2 0
HSBC Holdings PLC§ A+/Stable bbb+ Strong (+1) Adequate (0) Strong (+1) Strong/Adequate (0) 0 a ALAC 1 0
Lloyds Banking Group PLC§ A+/Stable bbb+ Strong (+1) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 a- ALAC 2 0
Nationwide Building Society A+/Stable bbb+ Adequate (0) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a- ALAC 2 0
The Royal Bank of Scotland Group PLC (NatWest Group PLC)§ A+/Stable bbb+ Strong (+1) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 a- ALAC 2 0
Standard Chartered PLC§ A+/Stable bbb+ Adequate (0) Adequate (0) Adequate (0) Strong/Strong (+1) 0 a- ALAC 2 0
Source: S&P Global Ratings; data as of May 30, 2024. 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. Sys. Imp.--Systemically important. ALAC--Additional loss-absorbing capacity. GCP--Group credit profile. CRA--Comparative Ratings Adjustment. N/A--Not applicable. Sov—government support.

Table 3

Ratings component scores: top 20 CEEMEA banks
Institution Operating company long-term ICR/outlook Anchor Business position Capital and earnings Risk position Funding and liquidity CRA adjustment SACP/GCP Type of support Number of notches support Additional factors
Bahrain
Ahli United Bank B.S.C. BBB+/Stable bb+ Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 bbb Group 1 0
Arab Banking Corp. B.S.C. BBB-/Stable bb+ Adequate (0) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 bbb- None 0 0
Jordan
Arab Bank PLC B+/Stable bb Strong (+1) Adequate (0) Moderate (-1) Strong/Strong (+1) 0 bb+ None 0 -3
Kuwait
National Bank of Kuwait S.A.K. A/Stable bbb Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a- Sov 1 0
Qatar
Qatar National Bank (Q.P.S.C.) A+/Stable bbb- Strong (+1) Adequate (0) Adequate (0) Adequate/Adequate (0) 0 bbb GRE 4 0
The Commercial Bank (P.S.Q.C.) A-/Stable bbb- Adequate (0) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bbb- Sov 3 0
Oman
BankMuscat S.A.O.G. BB+/Positive bb Strong (+1) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bb+ None 0 0
Saudi Arabia
The Saudi National Bank A-/Stable bbb Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a- None 0 0
Al Rajhi Bank A-/Stable bbb Strong (+1) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 a- None 0 0
Riyad Bank A-/Stable bbb Adequate (0) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 bbb+ Sov 1 0
Banque Saudi Fransi A-/Stable bbb Adequate (0) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bbb Sov 2 0
Arab National Bank A-/Stable bbb Adequate (0) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bbb Sov 2 0
The Saudi Investment Bank BBB/Positive bbb Moderate (-1) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bbb- Sov 1 0
United Arab Emirates
Mashreqbank A/Stable bbb- Adequate (0) Strong (+1) Adequate (0) Adequate/Adequate (0) 0 bbb Sov 3 0
First Abu Dhabi Bank P.J.S.C. AA-/Stable bbb- Strong (+1) Strong (+1) Strong (+1) Adequate/Strong (0) 0 a- GRE 2 1
Abu Dhabi Commercial Bank PJSC A/Positive bbb- Strong (+1) Strong (+1) Moderate (-1) Adequate/Adequate (0) 0 bbb GRE 3 0
Source: S&P Global Ratings; data as of May 30, 2024. 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. Sys. Imp.--Systemically important. ALAC--Additional loss-absorbing capacity. GCP--Group credit profile. CRA--Comparative Ratings Adjustment. N/A--Not applicable. Sov—government support.

Table 4

Ratings component scores: nonbank financial institutions (NBFIs)
Institution Industry Operating company long-term ICR/outlook Anchor Business position Capital and earnings Risk position Funding and liquidity CRA adjustment SACP/GCP Type of support Number of notches support Additional factors
Azerbaijan
Entrepreneurship Development Fund of the Republic of Azerbaijan NBFI -- Finco BB-/Positive b Adequate (0) Very strong (+2) Moderate (-1) Adequate/ Adequate (0) +1 bb- None 0 0
Cyprus
Ronin Europe Ltd. NBFI -- Securities Firm B+/Stable bb- Constrained (-2) Very strong (+2) Adequate (0) Adequate/ Adequate (0) -1 b+ None 0 0
Denmark
Saxo Bank A/S NBFI -- Securities Firm A-/Negative bbb- Moderate (-1) Very strong (+2) Adequate (0) Strong / Strong (+1) -1 bbb ALAC 2 0
Finland
LocalTapiola Finance Ltd NBFI -- Finco BBB/Stable bbb- Moderate (-1) Adequate (0) Moderate (-1) Adequate/ Adequate (0) 0 bb Group 3 0
Kazakhstan
OnlineKazFinance Microfinance Organization JSC NBFI -- Finco B-/Stable b Moderate (-1) Moderate (0) Moderate (-1) Adequate/ Adequate (0) 0 b- None 0 0
Saudi Arabia
Saudi Real Estate Refinance Company NBFI -- Finco A-/Stable bbb- Adequate (0) Strong (+1) Moderate (-1) Moderate/ Adequate (-1) 0 bb+ GRE 4 0
United Kingdom
Marex Group PLC NBFI -- Securities Firm BBB-/Stable bbb- Adequate (0) Strong (+1) Adequate (0) Adequate/ Adequate (0) 0 bbb None 0 -1
NewDay Group (Jersey) Ltd. NBFI -- Finco B+/Stable bb+ Moderate (-1) Constrained (-3) Adequate (0) Adequate/ Adequate (0) +1 b+ None 0 0
Together Financial Services Ltd. NBFI -- Finco BB/Stable bb+ Moderate (-1) Adequate (0) Adequate (0) Adequate/ Adequate (0) 0 bb None 0 0
Source: S&P Global Ratings; data as of May 30, 2024. ICR--Issuer credit rating. GRE--Government-related entity. SACP--Stand-alone credit profile. Sys. Imp.--Systemically important. ALAC--Additional loss-absorbing capacity. GCP--Group credit profile. CRA--Comparative Ratings Adjustment. N/A--Not applicable. Sov—government support.

Table 5

Recent rating actions: EMEA banks
Date of action Bank Country To From
May 23, 2024 BFA Tenedora de Acciones, S.A.U. Spain BBB-/Positive/A-3 BB+/Stable/B
May 22, 2024 Carrefour Banque S.A. France BBB/Negative/A-2 BBB/Stable/A-2
May 21, 2024 Jordan Islamic Bank Jordan NR B+/Stable/B
May 17, 2024 Alior Bank S.A Poland BB+/Positive/B BB+/Stable/B
May 17, 2024 mBank S.A Poland BBB/Positive/A-2 BBB/Stable/A-2
May 17, 2024 VP Bank AG Liechtenstein A-/Negative/A-2 A-/Stable/A-2
May 16, 2024 Ceska Sporitelna, a.s. Czech Republic A/Stable/A-1 A/Negative/A-1
May 10, 2024 Banco BPI S.A. Portugal BBB+/Positive/A-2 BBB+/Stable/A-2
May 7, 2024 Permanent TSB Group Holdings PLC Ireland BB+/Positive/B BB+/Stable/B
May 7, 2024 Permanent TSB PLC Ireland BBB+/Positive/A-2 BBB+/Stable/A-2
May 2, 2024 Bank Leumi le-Israel B.M. Israel A-/Negative/A-2 A/Negative/A-1
May 2, 2024 Bank Hapoalim B.M. (New York branch) Israel A-/Negative/A-2 A/Negative/A-1
Apr 30, 2024 Bank of Aland PLC Finland NR BBB+/Stable/A-2
Apr 30, 2024 Ibercaja Banco S.A. Spain BBB-/Positive/A-3 BBB-/Stable/A-3
Apr 30, 2024 CaixaBank, S.A. Spain A-/Positive/A-2 A-/Stable/A-2
Apr 30, 2024 Banco de Sabadell S.A. Spain BBB+/Positive/A-2 BBB+/Stable/A-2
Apr 30, 2024 Cajamar Caja Rural S.C.C. Spain BB+/Positive/B BB+/Stable/B
Apr 30, 2024 Banco de Credito Social Cooperativo S.A. Spain BB+/Positive/B BB+/Stable/B
Apr 30, 2024 Abanca Corporacion Bancaria S.A. Spain BBB-/Positive/A-3 BBB-/Stable/A-3
Apr 26, 2024 Arion Bank Iceland NR BBB+/Stable/A-2
Apr 8, 2024 Banque de Tunisie et des Emirats Tunisia CCC+/Stable/C CCC/Negative/C
Apr 8, 2024 Arab Tunisian Bank Tunisia CCC+/Stable/C CCC/Negative/C
Apr 4, 2024 Landsbankinn hf Iceland BBB+/Stable/A-2 BBB/Positive/A-2
Apr 4, 2024 Islandsbanki hf Iceland BBB+/Stable/A-2 BBB/Positive/A-2
Apr 4, 2024 Arion Bank Iceland BBB+/Stable/A-2 BBB/Stable/A-2
Apr 1, 2024 BankMuscat Oman BB+/Positive/B BB+/Stable/B
Apr 1, 2024 ForteBank JSC Kazakhstan NR BB-/Positive/B
Mar 22, 2024 First City Monument Bank Nigeria B-/Negative/B B-/Stable/B
Mar 22, 2024 Clydesdale Bank PLC United Kingdom A-/Watch Pos/A-2 A-/Stable/A-2
Mar 22, 2024 Virgin Money UK PLC United Kingdom BBB-/Watch Pos/A-3 BBB-/Stable/A-3
Mar 21, 2024 Commercial International Bank (Egypt) S.A.E. Egypt B-/Positive/B B-/Stable/B
Mar 21, 2024 Banque Misr S.A.E. Egypt B-/Positive/B B-/Stable/B
Mar 21, 2024 National Bank of Egypt S.A.E Egypt B-/Positive/B B-/Stable/B
Mar 19, 2024 Nurbank JSC Kazakhstan B-/Positive/B B-/Stable/B
Mar 19, 2024 Kaspi Bank JSC Kazakhstan BB/Positive/B BB/Stable/B
Mar 19, 2024 Halyk Bank JSC Kazakhstan BB+/Positive/B BB+/Stable/B
Mar 19, 2024 ForteBank JSC Kazakhstan BB-/Positive/B BB-/Stable/B
Mar 19, 2024 Bank CenterCredit JSC Kazakhstan BB-/Positive/B BB-/Stable/B
Mar 18, 2024 BPER Banca SpA Italy BBB-/Positive/A-3
Mar 15, 2024 Abu Dhabi Commercial Bank United Arab Emirates A/Positive/A-1 A/Stable/A-1
Mar 13, 2024 Kommunalkredit Austria AG Austria BBB/Stable/A-2 BBB-/Positive/A-3
Mar 12, 2024 Banco Comercial Portugues S.A Portugal BBB-/Positive/A-3 BBB-/Stable/A-3
Mar 5, 2024 KA Finanz AG Austria NR AA+/Stable/A-1+
Mar 5, 2024 Banco Santander Totta Portugal A-/Positive/A-2 BBB+/Positive/A-2
Feb 26, 2024 Banca Popolare di Sondrio S.p.A Italy BBB-/Stable/A-3
Feb 22, 2024 Iccrea Banca S.p.A. Italy BBB-/Stable/A-3 BB+/Positive/B
Feb 14, 2024 Deutsche Pfandbriefbank AG Germany BBB-/Negative/A-3 BBB/Negative/A-2
Feb 6, 2024 Aegon Bank N.V Netherlands BBB+/Negative/A-2 A-/Stable/A-2
Feb 9, 2024 Banco de Sabadell Spain BBB+/Stable/A-2 BBB/Positive/A-2
Feb 9, 2024 Ardshinbank CJSC Armenia BB-/Stable/B B+/Positive/B
Jan 16, 2024 Xalq Bank Uzbekistan B/Negative/B B/Watch Neg/B
Dec 20, 2023 PASHA Bank Azerbaijan BB-/Stable/B B+/Stable/B
Dec 20, 2023 Entrepreneurship Development Fund of the Republic of Azerbaijan Azerbaijan BB-/Positive/B BB-/Stable/B
Dec 14, 2023 Piraeus Financial Holdings S.A. Greece B/Positive/B B-/Positive/B
Dec 14, 2023 Piraeus Bank S.A. Greece BB-/Positive/B B+/Positive/B
Dec 14, 2023 National Bank of Greece S.A. Greece BB/Positive/B BB-/Positive/B
Dec 14, 2023 Eurobank Holdings Greece B+/Positive/B B/Positive/B
Dec 14, 2023 Eurobank S.A Greece BB/Positive/B BB-/Positive/B
Dec 14, 2023 Alpha Services and Holdings Societe Anonyme Greece B/Positive/B B/Stable/B
Dec 14, 2023 Alpha Bank SA Greece BB-/Positive/B BB-/Stable/B
Dec 14, 2023 Aegean Baltic Bank S.A Greece B+/Positive/B B+/Stable/B
Dec 14, 2023 Bank of Cyprus Cyprus BB/Positive/B BB-/Positive/B
Dec 12, 2023 Hypo Vorarlberg Bank Austria A+/Negative/A-1 A+/Stable/A-1
Dec 11, 2023 Ecobank Nigeria Ltd. Nigeria B-/Negative/B B-/Stable/B
Dec 8, 2023 Deutsche Bank Germany A/Stable/A-1 A-/Positive/A-2
Nov 27, 2023 Lansforsakringar Bank Sweden A/Positive/A-1 A/Stable/A-1
Nov 27, 2023 Lansforsakringar AB Sweden A/Positive/A-1 A/Stable/A-1
Nov 23, 2023 Credit Municipal de Paris France AA-/Negative/A-1+ NA
Nov 23, 2023 Ahli United Bank Bahrain BBB+/Stable/A-2 BBB/Positive/A-2
Nov 17, 2023 Deutsche Pfandbriefbank Germany BBB/Negative/A-2 BBB+/Stable/A-2
Nov 17, 2023 Landsbankinn hf. Iceland BBB/Positive/A-2 BBB/Stable/A-2
Nov 17, 2023 Islandsbanki hf Iceland BBB/Positive/A-2 BBB/Stable/A-2
Nov 17, 2023 Arion Bank Iceland BBB/Stable/A-2 BBB/Negative/A-2
Nov 14, 2023 Bank Polska Kasa Opieki Poland BBB+/Positive/A-2 BBB+/Stable/A-2
Nov 10, 2023 Commerzbank AG Germany A-/Positive/A-2 A-/Stable/A-2
Oct 31, 2023 Freedom Finance Global PLC Kazakhstan B/Negative/B B/Watch Neg/B
Oct 31, 2023 Freedom Holding Corp. Kazakhstan B-/Negative/-- B-/Watch Neg/--
Oct 31, 2023 Freedom Finance JSC Kazakhstan B/Negative/B B/Watch Neg/B
Oct 31, 2023 Israel Discount Bank Ltd. Israel BBB+/Negative/A-2 BBB+/Positive/A-2
Oct 31, 2023 Mizrahi Tefahot Bank Ltd. Israel A-/Negative/A-2 A-/Stable/A-2
Oct 31, 2023 Bank Hapoalim B.M. Israel A/Negative/A-1 A/Stable/A-1
Oct 31, 2023 Bank Leumi le-Israel B.M. Israel A/Negative/A-1 A/Stable/A-1
Oct 25, 2023 Iccrea Banca SpA Italy BB+/Positive/B BB+/Stable/B
Oct 25, 2023 Muganbank OJSC Azerbaijan NR B-/Stable/B
Oct 24, 2023 Commercial International Bank (Egypt) S.A.E. Egypt B-/Stable/B B/Stable/B
Oct 24, 2023 Banque Misr (S.A.E.) Egypt B-/Stable/B B/Stable/B
Oct 24, 2023 National Bank of Egypt (S.A.E) Egypt B-/Stable/B B/Stable/B
Oct 23, 2023 Bank Alliance JSC Ukraine CCC+/Stable/C CCC/Developing/C
Oct 20, 2023 Central Bank of Savings Banks Finland Finland A-/Stable/A-2 A-/Negative/A-2
Oct 6, 2023 L-Bank Germany AA+/Positive/A-1+ AA+/Stable/A-1
Oct 5, 2023 BankMuscat Oman BB+/Stable/B BB/Positive/B
Oct 5, 2023 Bonum Bank Finland BBB/Positive/A-2 BBB/Stable/A-2
Oct 3, 2023 Dexia Crediop SpA Italy NR BBB/Stable/A-2
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 + 97143727153;
mohamed.damak@spglobal.com
Nicolas Charnay, Frankfurt +49 69 3399 9218;
nicolas.charnay@spglobal.com
Additional Contact:Financial Institutions EMEA;
Financial_Institutions_EMEA_Mailbox@spglobal.com

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