LONDON, UK – DBRS Ratings GmbH (Morningstar DBRS) upgraded the credit ratings of Piraeus Bank S.A., including the Long-Term Issuer Rating to BB (high) from BB. Concurrently, Morningstar DBRS upgraded the credit rating on the Bank’s Long-Term Deposits to BBB (low), which is one notch above the Intrinsic Assessment (IA), reflecting the legal framework in place in Greece, which has full depositor preference in bank insolvency and resolution proceedings. The trend on all credit ratings was changed to Positive from Stable. The Bank’s IA has been upgraded to BB (high) from BB and its Support Assessment remains SA3. See the full list of credit ratings at the end of this press release.

KEY CREDIT RATING CONSIDERATIONS

Piraeus Bank S.A. is the main operating entity of the Piraeus Financial Holdings Group (Piraeus or the Group), which is one of the four systemic banking groups in Greece. Since 2020, the Bank is a 100% subsidiary of Piraeus Financial Holdings S.A.

The upgrade reflects the Group’s structurally improved ability to generate earnings on a recurring basis, supported by higher interest rates as well as cost control and lower credit costs. The upgrade also takes into account the continued progress Piraeus has achieved in de-risking its balance sheet, thanks to a reduction in the stock of legacy non-performing exposures (NPEs), as well as limited new NPE inflows and strengthening its loan coverage levels. The combination of these factors, coupled with additional capital management actions, has strengthened Piraeus’ capital buffers over its supervisory requirements despite the resumption of dividend distributions and loan growth.

The credit ratings continue to take into account the Group’s robust domestic franchise in retail and corporate banking, and stable funding and liquidity position, which relies on a large and sticky deposit base. Nonetheless, the credit ratings also incorporate the moderate diversification of Piraeus’ business model, revenue streams, and funding structure as well as the still-high, albeit reduced, level of deferred tax credits (DTCs) included in the Group’s capital structure.

The Positive trend reflects Morningstar DBRS’ view that the Group’s profitability and risk profile will likely remain sound in the foreseeable future despite some potential deterioration triggered by interest margin compression, higher investments for digitalization, and potentially higher loan loss provisions (LLPs) if asset quality risks materialize in the current still-high interest-rate environment. The Group’s strong operating efficiency as well as its more robust loan coverage levels and capital buffers represent key mitigating factors. This, combined with potential further de-risking, the expected more benign prospects for the Greek economy relative to the European average, and some support for credit expansion stemming from the European Recovery and Resilience Facility (RRF) funds and lower rates should help Piraeus face any potential downside risk.