DBRS raises Abanca

DBRS said it upgraded Abanca Corporacion Bancaria SA’s ratings, including the long-term senior debt rating to BBB (high) from BBB.

“The upgrade of Abanca’s ratings reflects the Bank’s leading regional franchise in its home market of Galicia, reinforced in recent years through several targeted acquisitions which have expanded the Bank’s footprint in both Spain and Portugal. We view these acquisitions as having diversified Abanca’s revenue mix while creating potential cost synergies which should improve profitability over the medium term,” DBRS said in a press release.

“The upgrade also considers Abanca’s good track record in integrating previous acquisitions, which has enabled the Bank to quickly leverage its new businesses. In our view, this has translated into continued core revenue improvement, through both higher fees and commissions and net interest income (NII). Although cost efficiency remains weaker than its domestic peer group, synergies have materialized on the cost side and we expect the cost-to-income ratio to improve over the medium term,” the agency added.

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