Moody's affirms Banca March's A3 rating with a stable outlook and underscores the bank’s robust credit profile, solvency and liquidity
27 September 2021 Category: Banca March
The rating agency emphasised that the bank's solid credit profile is attributable to its strong ties with its home market and the strength of the Banca March brand in corporate banking and wealth management.
- Moody’s emphasised that the strength of the brand in corporate banking and wealth management and the bank’s close ties with the Balearic Islands underpin “stable, recurring profits”.
- The rating agency also affirmed its P-2 rating for the Banca March's short-term deposits.
Rating agency Moody's has affirmed its A3 rating of Banca March's long-term deposits with a stable outlook, consolidating the bank’s position as one of the best-rated financial institutions in the Spanish financial sector with a stronger rating than Spanish sovereign debt, which is currently rated Baa1. The agency attributed this robust rating to "the bank's solid credit profile, with solvency metrics that rank among the strongest within Spanish rated banks, and its solid liquidity position underpinned by a high availability of liquid assets." The short-term deposit ratings have been affirmed at P-2.
The rating agency emphasised that the bank's solid credit profile is attributable to its strong ties with its home market, the Balearic Islands, and the strength of the Banca March brand in corporate banking and wealth management, both of which underpin "stable, recurring profits", robust capital metrics and a strong liability structure, backed by the bank's broad deposit base and high availability of liquid assets.
Moody’s also commended Banca March's low exposure to nonperforming assets; thanks to its prudent lending policy, the bank's asset quality indicators compare very favourably with the system average. The bank's NPL ratio stood at 1.62% in December 2020, down from 1.82% at the end of the previous year and significantly lower than the sector average of 4.3%. Risk exposure from real estate assets also compares favourably with the rest of the sector, adding just 140 bps to the bank’s NPL ratio, versus 220 bps for the sector as a whole. Moody’s also highlighted Banca March's strong NPL coverage ratio, which stood at 59% last December versus 70% for the sector as a whole.
The rating agency praised the bank's healthy regulatory capital ratios, with CET 1 capital standing at 18.4% at the end of 2020, despite the fact that this metric “is penalised by the regulatory treatment of the bank's stake in Alba, which is considered to be a significant investment in the capital of a financial institution and as such is subject to a capital deduction.” Once again, Moody's also endorsed Banca March's income structure, which is geared heavily towards its specialist wealth management and private banking business, in addition to service income from its subsidiary Inversis: "Fee income and income from services account for around 50% of the bank's operating income, affording a certain degree of income stability against a backdrop of low interest rates."