Moody's lowers ratings on Czech lender CSOB after parent KBC downgrade.

By bne IntelliNews June 25, 2012
Moody's Investors Service has downgraded the ratings of Czech lender Ceskoslovenska obchodni banka (CSOB) by one notch following the two-notch downgrade of the ratings of its parent bank, Belgian KBC group, the rating agency said in a statement. CSOB's long term deposit ratings were lowered to A2 from A1 and the bank's standalone Bank Financial Strength Rating (BFSR) was reduced to C-/baa1 from C/a3 reflecting the increased pressures that the bank faces from the weakening of the credit profile of KBC Bank group and the weakened operating environment in Czech Republic. According to Moody's, the more difficult operating environment in the country will constrain CSOB earnings and put pressure on the lender's problem loans. The negative outlook of CSOB deposit ratings reflects Moody's expectation that upwards pressure on the bank's ratings is limited at this stage. The agency said that the ratings could be stabilised over time if the bank improves its performance or pressures from the parent group ease. CSOB, the Czech Republic's largest bank by assets, reported a 10% growth in underlying and a 6% rise in reported profit to CZK 4bn (EUR 158.2mn) in the first quarter of 2012 helped by expanding loan portfolio and falling credit costs.
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