Moody's affirms AS "Citadele banka" ratings, changes outlook to positive

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On 25 January 2024, the international credit rating agency Moody’s has affirmed Citadele’s Baa2 credit rating, changing outlook to positive

“Moody’s affirmation and positive outlook confirms our continued strong performance of the bank. It also reaffirms that we are making good progress in achieving our long-term strategy to become the leading financial services provider in the Baltics. We are proud that despite the challenging economic environment in 2023, we have continued to provide our customers with best-in-class financial services and ensured that the bank operates with strong capital and liquidity ratios”, says Johan Åkerblom, Citadele CEO.

The outlooks on the long-term deposit and senior unsecured debt ratings were changed to positive from stable, reflecting Moody’s view that Citadele’s capital will continue to strengthen during the next 12 to 18 months, supported by higher sustained profitability and stable credit quality.

Upon affirmation of Citadele’s long-term Baa2 deposit rating and Baa3 senior unsecured debt rating, Moody’s has considered Citadele’s strong improvement in earnings during 2023 and forecast of continued strong earnings in coming quarters despite its expectation that interest rate margins had peaked in the third quarter of 2023, and Latvia’s imposition of a 2% mortgage levy and a 20% effective corporate tax rate. Citadele’s capitalisation has increased, and credit quality has held up well during 2023 with problem loans as a share of gross loans being 2.36% at the end of September 2023.

Citadele is currently conducting a strategic review. The rating affirmation reflect the forward-looking standalone assessment of Citadele Banka under its current strategy, including current capital plans and funding plans. Moody’s has also affirmed Citadele’s P-2 short-term deposit rating and Baa3 senior unsecured debt rating. The long- and short-term Counterparty Risk Ratings (CRR) were affirmed at Baa1/P-2. The Baseline Credit Assessment (BCA) and Adjusted BCA were affirmed at ba1.

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