Novobanco achieves investment grade rating from Fitch

The ratings agency Fitch has upgraded Novobanco’s investment rating after the bank had presented significant improvements since it was bought out by US equities and asset management fund Lone Star in 2017.

Fitch awarded the bank run by Mark Bourke a BBB- (Outlook stable) note. “The Novobanco classification mainly reflects the bank’s business model supported by its retail and commercial performance and satisfactory levels of capital” said a communiqué from the agency.
Fitch points out that Novobanco’s capitalisation “improved significantly in 2023 due to the retention of high profits and good profitability which benefited from cost controls and significantly higher interest rates”.
The agency adds that the “rating also reflects financial stability from deposits and an improvement in the quality of its assets” but warns that this quality “remains weaker than the other main Portuguese banks that have higher classifications.”
Novobanco emphasises that in April, 2023, it “announced the objective of achieving an investment grade rate in the medium term” and that the rating announced on Thursday is a “relevant milestone” and confirms the positive trajectory of the bank’s credit profile achieved in the run-up to Fitch awarding it an investment grade rating.
Novobanco announced a net income of €638.5 million (1Q23: €148.4 million; 2Q23: €224.8million; 3Q23: €265.3 million), backed by a solid domestic and simple business model, delivering increased profitability from top line performance, together with contained costs as a result of efficiency measures implemented in recent years.

Image: Vector Mais interior design architects that has recently revamped Novobanco branches nationwide.