Moody's on June 6 downgraded Banco Popular Español SA's long-term deposit ratings to B2 from Ba3 and the bank's and its supported entities' long-term senior unsecured debt ratings to B3 from B1. The rating outlook remains negative.
The rating agency also downgraded the bank's long-term counterparty risk assessment to Ba3(cr) from Ba2(cr) and its baseline and adjusted baseline credit assessments to "caa1" from "b3."
The agency cited concerns about the bank's weak financial profile, following continued negative newsflow related to the future of the bank. Banco Popular is under increasing pressure to improve its risk-absorption capacity and speed up the reduction of its problematic assets, Moody's noted.
Popular's nonperforming loans ratio stood at 14.91% as of March 31, up from 12.68% a year ago. The coverage ratio for NPLs and written-off loans, however, rose over the period to 62.00% from 52.40%.
Banco Popular reported a loss of €137.1 million in the first quarter, compared to a €93.8 million profit in the year-ago period, amid elevated provisions mainly relating to real estate operations.
The bank's phased-in common equity Tier 1 ratio stood at 10.02% at March-end, down from a re-expressed 11.53% at the end of 2016 and 12.81% a year ago. The Basel III leverage ratio declined to 4.51% from 5.97% as of March 31, 2016.