Fitch Ratings has maintained the ratings of Albanian ProCredit Bank Sh.a. (PCBA) with a stable outlook. The Long-Term Issuer Default Rating (IDR) is affirmed at 'BB-', while the Shareholder Support Rating (SSR) stands at 'bb-' and the Viability Rating (VR) at ‘b-‘, the rating agency said on June 26. 

The ratings reflect Fitch's belief in potential support from PCBA's sole shareholder, ProCredit Holding AG & Co. KGaA (PCH; BBB/Stable).

PCBA's VR is one notch lower than its implied VR, reflecting its limited market presence and small size, which hinder its ability to generate sustainable earnings. The VR also takes into account the bank's below-average risk profile and comparatively stronger asset quality within Albania's high-risk operating environment.

The ratings are constrained by Albania's country risks, particularly transfer and convertibility risks, Fitch said. According to the agency, Albania is a “challenging” operating environment that poses obstacles for banks, as the economy heavily relies on cyclical tourism and agriculture sectors, which limits growth opportunities and diversification of loan portfolios.

PCBA benefits from the risk management framework implemented by the ProCredit Group, ensuring prudent underwriting standards and risk controls. However, profitability remains modest, with operating profit to risk-weighted assets at 0.5% in 2022 and 1Q23. 

Asset quality at PCBA is relatively better than the sector average, with a 3.1% impaired loans ratio compared to the banking sector's 5.2% at the end of the first quarter of 2023. However, the bank's loan portfolio concentration, coupled with its small size, may result in higher volatility.