Fitch affirms BBB-/negative rating for Romania's leading lender Banca Transilvania

Fitch Ratings on December 4 affirmed the long-term Issuer Default Rating (IDR) for Romania's largest lender, Banca Transilvania (BVB: TlV), at BBB- with a negative outlook, in line with the country's sovereign rating.

The price of the bank's shares rose 1.2% on the day the rating agency announced its decision, bringing the bank's market capitalisation to RON 32.7 billion (EUR 6.5 billion).

The rating reflects the bank's strong and well-established domestic franchise, healthy capital buffers supported by strong internal capital generation and stable funding profile, and reasonable asset quality, underpinned by conservative underwriting.

Future actions on the bank's rating would be triggered by changes in the sovereign ratings or sustained deterioration in the bank's asset quality (with the impaired loans ratio rising above 4%) and a structural weakening of operating profitability to below 2.5% of risk-weighted assets.

Banca Transilvania's Viability Rating (VR) was confirmed at bbb-.

The negative outlook on the 'bbb-' operating environment score for Romanian banks mirrors that on the sovereign rating and reflects the potential for a downward revision of the score if the sovereign rating is downgraded, the rating agency said.

Risks to the Romanian sovereign and the operating environment put pressure on Transilvania's business, risk, and financial profiles, given the bank's large concentration in the country.

(Photo source: Bancatransilvania.ro)