Moody’s rates Advanzia B+

Moody’s Investors Service said it assigned B+ foreign- and local-currency ratings to Advanzia Bank SA. Sometime this year, the bank plans to sell €300 million of senior unsecured debt.

The rating is based on the agency’s advanced loss given failure analysis and a low probability of government support in a crisis.

“Advanzia's asset risk is very high, reflecting the risk characteristics of unsecured credit card lending, which Moody's views as prone to high levels of impairment in economic downturns. The bank's problem loan ratio was 7.3% at year-end 2022, a ratio, which is not fully reflective of asset risks because problem loans are regularly sold or written off, which deflates the ratio,” Moody’s said in a press release.

However, the credit card business is also a strength since it charges its customers very high interest rates and it is moving into the Spanish and Italian markets. On the down side, the new business could lead to higher loan losses, the agency warned.

The outlook is positive, reflecting the view the ratings will benefit from higher volume and subordination of loss-absorbing instruments, Moody’s said.

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