Global credit rating agency Morningstar DBRS upgraded the National Bank of Greece (NBG) to a BBB investment grade – a rating denoting good prospects for ongoing viability.

This makes NBG the first Greek bank to regain Investment grade status, nearly 15 years after the onset of the Greek financial crisis.

The NBG released a statement after the rating: “The credit rating reflects NBG’s leading franchise in Greece, strengthened balance sheet, core earnings power, sustained organic capital buildup, as well as strong funding and liquidity position.”

According to DBRS, the BBB rating reflects NBG’s leading franchise in retail and corporate banking in Greece despite the deep restructuring process required after the global economic crisis and the Greek public debt crisis.

The global rating agency refers to the Greek systemic bank’s continuous progress in strengthening its balance sheet by reducing its non-performing exposures (NPEs) and increasing NPE coverage levels.

In its rating, DBRS considered NBG’s improvement of its core earnings strength due to higher interest margins, cost savings, and overall reduced cost of credit. This has resulted in the Bank steadily accumulating capital levels organically and, in turn, stronger security reserves about regulatory requirements.

DBRS also points to NBG’s stable funding and liquidity position, mainly benefiting from a large and stable deposit base. However, DBRS’s credit ratings reflect NBG’s moderate business model diversification, revenue mix, and funding structure, as well as the high level of deferred tax credits (DTCs) corresponding to its capital structure.

DBRS underlines the negative impacts on NBG’s risk profile will be mitigated by the following aspects: the favorable prospects for the Greek economy compared to the European average, the potential support from the credit expansion due to projects linked to the European Recovery and Resilience Facility (RRF) capital. These risks also remain balanced due to stronger loan coverage levels and security reserves.

Moreover, NBG’s core profitability will remain healthy in the future despite the compression of interest margins, higher digital investments, and potentially higher cost of credit.