Fitch affirms CEC Bank's BB rating ahead of bank's bonds listed at BVB

The relatively simple business model and its "quite conservative risk appetite for retail lending" of the state-owned CEC Bank is securing the stability of the bank's BB Long-Term Issuer Default Rating, international rating agency Fitch explains while upholding the ratings issued in March 2022.

The operating environment, resilient even to a one-notch sovereign downgrade, on the other hand, is also propping bank's ratings, the agency said.

CEC Bank's bonds will start trading at the Bucharest Stock exchange (BVB) on February 27.

CEC's risk profile assessment is commensurate with its relatively simple business model and balances the bank's quite conservative risk appetite for retail lending dominated by mortgage loans against a fairly concentrated loan portfolio of corporate loans.

Fitch also argues in broader terms that the operating environment for banks in Romania will be consistent with a 'BB+' score even if there was a one-notch downgrade of the BBB-/negative Romanian sovereign IDR.

Improved interest margins, low unemployment, and banks' generally reasonable underwriting should contain most of the risks generated by the rapidly slowing economic growth, coupled with high inflation and monetary tightening likely to limit lending growth and exert pressure on banks' operating expenses.

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