DBRS on June 11 confirmed the BB (high)/R-3 long- and short-term issuer ratings and BBB/R-2 (high) critical obligations ratings of Millennium BCP and revised the trend on the ratings to positive from stable.
The Portuguese bank's intrinsic assessment is BB (high), while its support assessment remains at SA3.
The agency said the confirmation of the ratings reflects the improvement of BCP's risk profile and profitability in Portugal in the past 12 months, as well as its strong local franchise and well-established international franchise in Poland and Mozambique. It also reflects the bank's good funding and liquidity positions and its adequate capitalization, DBRS added.
However, the ratings are still affected by high nonperforming loans and unreserved NPL ratio, which remains higher than most of its European peers, and its modest capital buffers over minimum regulatory requirements.
The positive trend, meanwhile, reflects DBRS' expectations that BCP will further cut its NPLs and cost of risk, on the back of a strong local franchise position and improving risk management, the agency noted.
