On Friday, S&P raised its rating on the main Spanish banks by one notch. The decision came in the wake of the rating upgrade by the same agency for Spain’s public debt on March 23, so its “a logical move,” according to Renta4.
S&P raised its long-term rating on Banco Santander from A- to A, with a stable outlook, the rating on BBVA from BBB+ to A- (stable outlook vs previous positive), and on Caixabank from BBB to BBB+, with a stable outlook. Then Bankia goes from BBB- to BBB (stable outlook vs former positive), Bankinter from BBB to BBB+, with a stable outlook and Banco Sabadell from BBB- to BBB, with a stable outlook. Abanca’s rating was also improved from BB- to BB, with a positive outlook (no change), while the ratings were confirmed for Cecabank and Kutxabank at BBB with a positive outlook. S&P highlighted the improvement in the sector’s financing profile, which it qualifies as more balanced as well as having a lower credit risk.
The country’s improved risk perception is based on three factors: the strength of the economy, the improvement in the external balance and the budget consolidation process. And with positive outlooks.
According to different media outlets, S&P’s decision last Friday to improve the Spanish banks’ ratings was based on a combination of factors, flagging a clear improvement in financing conditions and the benefits they will obtain from the improving economy. Undoubtedly the decisions taken by the ECB during the crisis have facilitated both an improvement in financing costs as well the functioning itself of the market. But these benefits have been channeled towards the real economy, the ultimated objective of these monetary measures. The current dynamic profile of the economy is the result of the effort made by the society to overcome the past imbalances, obtaining the greatest benefit via very favourable financing conditions.
In the view of the Spanish Banking Association, the improved rating is “deserved recognition” for the Spanish banks.
They made a significant effort in terms of consolidation and adjustments during the crisis. Now they are in an adequate position to continue to underpin a future scenario of greater growth and prosperity.
For Bankinter analysts, S&P’s decision also confirms its positive view of the sector in the long-term.
Thanks to the progressive rise in business volumes and the improved credit risk – less provisions – against a favourable backdrop facilitating the increase in RoTE in the long-term.