Bank of Valletta plc - S&P Upgrades BOV’s Long-Term Rating

On 29 September 2023, BOV issued a press release confirming that Standard and Poor’s assigned a BBB-/A-3 rating while upgrading the outlook to stable. The press release noted that the international credit rating agency confirmed that it would also consider a further rating upgrade by one notch in future evaluation once the Bank registers an additional loss-absorbing capacity buffer that comfortably exceeds their 4% risk-adjusted capital ratio threshold.

S&P noted that the Maltese economy has sound economic fundamentals and its real GDP is expected to grow by more than 3% in both 2023 and 2024, compared to a Euro Area average of less than 1%. Furthermore, S&P observed that the regulator has implemented effective policy measures to reduce the risk of financial imbalances.

S&P expects BOV to maintain strong capitalisation and resilient asset quality metrics where the bank’s risk-adjusted capital ratio will be 14.3%-14.8%, supported by improving net profits and a prudent dividend policy.

S&P also anticipate that BOV will benefit from diminishing reputational risks in the banking sector, which was a key factor for BOV to enter a new US correspondent banking agreement with an international bank.