Investing.com -- Moody’s Ratings has upgraded the long-term deposit ratings of Banco Comercial Portugues, S.A. (BCP) and its Macao branch, Banco Comercial Portugues, SA, Macao Br (BCP Macao) to A2 from A3. The ratings agency also affirmed BCP’s senior unsecured debt and medium-term note (MTN) programme ratings at Baa1/(P)Baa1.
Additionally, Moody’s upgraded BCP’s and BCP Macao’s Baseline Credit Assessment (BCA) and Adjusted BCA to baa2 from baa3, the junior senior unsecured MTN programme rating to (P)Baa2 from (P)Baa3, and the subordinated debt and subordinate MTN programme ratings to Baa3/(P)Baa3 from Ba1/(P)Ba1. The long- and short-term Counterparty Risk (CR) Assessments were also upgraded to A2(cr)/Prime-1(cr) from A3(cr)/Prime-2(cr), along with the long- and short-term Counterparty Risk Ratings (CRRs) to A2/Prime-1 from A3/Prime-2. The outlook on the long-term deposit ratings of both entities has been changed to stable from positive, while the outlook on the senior unsecured debt rating of BCP remains stable.
BCP and BCP Macao’s short-term deposit ratings have been upgraded to Prime-1 from Prime-2.
The upgrade of BCP’s BCA is reflective of the group’s strengthened creditworthiness, particularly its significantly improved asset-risk metrics, higher capital levels, and enhanced bottom-line profitability. Despite legal provisions associated with BCP’s Polish subsidiary’s legacy Swiss franc mortgage portfolio, the bank’s sound funding and liquidity position are expected to continue.
The bank’s non-performing assets (NPAs) ratio stood at 3.8% and nonperforming loans (NPLs) ratio at 3.3% as of the end of December 2024, down from 4.3% and 3.5% a year earlier. BCP’s profitability metrics have also improved, with the group reporting a net profit of €1,000 million in 2024, up 5.6% from €948 million a year earlier.
Moody’s expects BCP’s adjusted tangible common equity (TCE) ratio to stay between 11% and 12%, above the levels seen in previous years. At the end of December 2024, the group reported a fully loaded CET1 ratio of 16.3%, well above its Supervisory Review and Evaluation Process requirement, which is 9.56% for 2025.
The upgrade of BCP’s long-term deposit ratings to A2 from A3 and the affirmation of its senior unsecured debt rating at Baa1 reflects the upgrade of the bank’s BCA and the unchanged outcome of Moody’s Advanced Loss Given Failure (LGF) analysis.
The stable outlook on BCP’s long-term deposit and senior unsecured debt ratings reflects Moody’s view that the bank’s expected performance over the next 12-18 months is already captured in the bank’s current ratings.
An upgrade of BCP’s long-term deposit and senior unsecured debt ratings could be prompted by an upgrade of its BCA, which could be upgraded as a result of a significant decline in the bank’s stock of problem assets alongside an improved capital position and profitability metrics beyond Moody’s expectations. A downgrade could result from an increase in the stock of NPAs and/or a worsening in the bank’s risk-absorption capacity or profitability.
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