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S&P revises outlook on Abanca on favorable profitability prospects

S&P Global Ratings on Sept. 10 revised the outlook on Abanca Corporación Bancaria SA's long-term issuer credit rating to positive from stable while affirming it at BB+.

The agency also affirmed the Spanish bank's B short-term issuer credit rating and "bb+" stand-alone credit profile.

The outlook change reflects the possibility of an upgrade of Abanca's ratings over the next 12 months if the bank manages to continue strengthening its profitability, which is becoming more in line with those of its higher-rated peers, without it taking on undue risks. It also reflects the agency's view that the bank's business and financial risk profiles could improve if it continues to boost its efficiency and returns.

Despite the expected economic softening in Europe and low-for-longer interest rate environment, Spain's operating environment is set to remain more supportive than its peer countries, which should help the bank's efforts to expand its earnings generation capacity and address its poor efficiency, S&P Global Ratings noted.

Moreover, the agency's assessment of Abanca's profitability prospects is supported by the bank's recent inorganic growth following its acquisition of Deutsche Bank AG's private and commercial client business in Portugal. Abanca is also set to integrate the Spanish operations of Caixa Geral de Depósitos SA, which should further bolster its revenue generation capacity and diversification, the agency added.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.