Fitch upgrades viability rating of Zagrebacka Banka

"The VR upgrade reflects the continued improvement in the bank's asset quality metrics, which we expect to be sustained in the prevailing operating conditions, along with the maintenance of strong profitability and capitalisation, stable funding and liquidity profile," Fitch said in a press release on Thursday.

The stable outlook reflects that on UniCredit.

The VR captures the bank's strong sector positioning, prudent risk management and the overall solid financial profile, underpinned by the recent improvements in asset quality, the global ratings agency explained.

ZABA's impaired loans decreased to a new low, 2.3% of Fitch-adjusted loans at the end of the first quarter of 2023, compared to 5.0% at the end of 2021, in common with the sector, as operating conditions remained favourable for Croatian banks' asset quality. Coverage by specific loan loss allowances was maintained at above 70%.

“We expect asset-quality metrics to stabilise around the current levels in the next two years,” Fitch added.

ZABA’s shares traded flat at 12.50 euro ($13.56) by 9:58 local time on November 17 on the Zagreb bourse.

($ = 0.921 euro)