September 22 (SeeNews) - Moody's Investors Service said it has downgraded the long-term deposit ratings of Bulgaria's Municipal Bank to B1 from Ba3 and changed the outlook to stable from negative.
The global ratings agency also downgraded Municipal Bank's Baseline Credit Assessment (BCA) and Adjusted BCA to b3 from b2, the bank's long-term Counterparty Risk Ratings (CRRs) to Ba3 from Ba2 and its long-term Counterparty Risk (CR) Assessment to Ba3(cr) from Ba2(cr), Moody's said in a statement on its website last week.
The downgrade reflects Moody's view that Municipal Bank continues to face significant challenges in achieving significantly higher and sustainable profitability, which in turn would support a stronger capacity to absorb potential losses and higher internal capital generation through earnings, the ratings agency said.
The stable outlook on the long-term deposit ratings balances the bank's weak profitability and the challenges it faces to deliver a more sustainable business model against its currently adequate capitalisation and the low level of problem loans it reports, according to Moody's.
Moody's noted the bank's adequate capital adequacy and deposit based funding profile, as well as progress made in recent years in reducing non-performing loans.
At the same time, Moody's affirmed the bank's short-term deposit ratings and CRRs at Not Prime and its short-term CR Assessment at Not Prime(cr).
According to data from the Bulgarian National Bank (BNB), Municipal Bank was the twelfth-largest bank in the country as of end-June, with total assets of some 2.27 billion levs ($1.36 billion/1.16 billion euro) and a market share of 1.7%.
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