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Moody's acts on Crédit Agricole Italia

Moody's on Sept. 24 revised the outlook on Crédit Agricole Italia SpA's long-term bank deposit ratings to stable from negative while affirming it at Baa1.

The outlook change reflects the agency's expectation that the bank's credit profile and the level of protection for its senior creditors will not change materially over the coming 12 to 18 months. The stable outlook also mirrors that on Italy's Baa3 government bond ratings.

Concurrently, Moody's upgraded the Italian lender's adjusted baseline credit assessment to "baa1" from "baa2," following the recent one-notch upgrade of the adjusted baseline credit assessment of French parent Crédit Agricole SA to "a3" from "baa1." The uplift takes into account Crédit Agricole Italia's stronger creditworthiness, given the very high probability of support for the entity from its parent.

Crédit Agricole Italia's baseline credit assessment was affirmed at "ba1," indicating Moody's expectation that the bank will continue to reduce its still-high stock of bad loans, albeit at a gradual pace, while maintaining a moderate capital position and modest profitability. At June-end, the lender's problem loans ratio dropped to 7.4% of gross loans from 13.3% at the end of 2015, the agency noted.

The bank's short-term bank deposit ratings of Prime-2, long- and short-term counterparty risk ratings of Baa1/Prime-2 and its long- and short-term counterparty risk assessments of Baa1(cr)/Prime-2(cr) were also affirmed.