Moody’s confirms BoV’s rating, ‘solid retail profile’

Moody’s investor service has maintained its D+ bank financial strength rating to Bank of Valletta (BoV), which translates into a Baseline Credit Assessment of Baa3.

"The rating is supported by the bank’s dominant domestic franchise in Malta, bolstered by a solid retail profile, as well as its adequate financial fundamentals buttressed by the good performance of the local economy in recent years,” Moody’s said.

"However, the rating also reflects key constraints including: (i) the bank's lack of core-business geographic diversification; (ii) its high single-party exposures; (iii) the material market risk arising from the bank’s large securities (mainly fixed-income) portfolio and sectoral concentration to financial institutions; and (iv) the credit portfolio’s high sensitivity to the performance of the local economy and the need for a further increase in loan loss provision cover.”

BoV also has a global local currency (GLC) deposit rating of A3/Prime-1, - a three-notch uplift from BoV’s Baa3 Baseline Credit Assessment - which, Moody’s said, took into account its assessment of a very high probability of systemic support for the bank in case of need

BoV’s foreign currency deposit ratings of A3/Prime-1 are unconstrained by Malta’s foreign currency deposit ceiling. The rating for the bank's US dollar-denominated senior unsecured debt is A3.

The outlook for all of the bank’s ratings is stable.