Fitch affirms Zagrebacka Banka at 'BBB', outlook stable

ZABA's IDRs reflect the high likelihood of support from its parent, Fitch said in a press release on Thursday. The stable outlook reflects that on UniCredit, it added.

The affirmation of the VR considers the bank's improving asset quality and profitability metrics in the post-pandemic recovery.

“We have revised up our assessment of the operating environment for Croatian banks to 'bbb-' with stable outlook. This factors in the sovereign's stronger credit profile and its better capacity to support market stability, the country's expected resilience to external shocks, reasonable growth opportunities for banks following the country's entry to the eurozone and the expected inflow of sizeable EU funds,”

Banks' asset quality and profitability have improved post-pandemic, while solvency and liquidity metrics were consistently strong, according to the credit rating issuer.

Croatia will join the eurozone as its 20th member on January 1, 2023.

ZABA is the largest bank in Croatia's small and highly concentrated banking sector, with about a 26% market share in sector assets. It is equally present in both corporate and retail segments, but has a particularly strong positioning in government financing and residential mortgage lending. It also operates a subsidiary bank, which is the largest lender in Bosnia and Herzegovina.

ZABA is a member of the main equity index of the Zagreb Stock Exchange, the 19-share CROBEX.

ZABA's shares traded 0.31% lower at 64 kuna ($8.8/8.5 euro) intraday on Friday on the Zagreb bourse.

(1 euro=7.546 Croatian kuna)