Moody's assigned Bangladesh-based Mercantile Bank Ltd. long-term foreign- and local-currency deposit and issuer ratings of B1, with a stable outlook.
The rating agency said May 11 that it also assigned the bank short-term foreign- and local-currency deposit and issuer ratings of Not Prime, as well as a baseline credit assessment and an adjusted baseline credit assessment of "b2."
The ratings reflect Moody's assumption of a moderate probability of public support from the Bangladesh government, if needed. The baseline credit assessment reflects the bank's modest solvency profile, good funding profile and modest liquidity position.
The bank's baseline credit assessment can be upgraded if it significantly improves its tangible common equity ratio and reduces its level of problem and rescheduled loans. The ratings could also be raised if Moody's lifts the macro profile for Bangladesh, which currently stands at a "weak" level.
An upgrade in the bank's baseline credit assessment may potentially lead to an upgrade in its deposit ratings, Moody's said.
Conversely, Mercantile Bank's baseline credit assessment and ratings could be downgraded if its solvency and liquidity metrics materially weaken or if the country's macro profile is lowered.