DBRS Morningstar Says Banks Will Absorb Additional NPE Disposals
Days after raising the outlook for the Greek credit sector from stable to positive, DBRS Morningstar said in a comment on Tuesday that it believes recent issues of subordinated debt and equity stocks should allow banks to absorb the debt. impact of additional non-performing exposure (NPE). assignments.
Nonetheless, the global rating agency considers external factors such as investor appetite and the macroeconomic environment to be critical to the success of banks. He noted that the combined Greek banks had reduced their stock of NPEs by 50% year-on-year on a pro forma basis from the end of 2020 and announced new plans to divest NPEs.
Strengthening capital bases through re-established and continued access to subordinated debt capital markets as well as equity shares should allow banks to absorb the impact of recently announced NPE divestiture plans, said DBRS Morningstar, adding that continued investor demand and the pace of the economic recovery, which will likely dictate the performance of loans that have been subject to payment suspensions, will be critical for banks to meet their targets.
“After a significant reduction in NPEs during a difficult year and recent announcements of additional risk reduction, we believe that the strengthening of capital should allow Greek banks to absorb the impact of the additional disposals of NPEs. The economic recovery as well as the level of investor demand will be essential for banks to achieve their objectives. »Commented the rating agency.