Fitch Ratings has revised from negative to stable the outlook for the Romanian (Romania: BBB-/negative) subsidiary of Turkish bank Garanti Bankasi (controlled by Banco Bilbao Vizcaya Argentaria BBVA), Garanti Bank Romania, while affirming the Romanian bank's Long-Term Issuer Default Rating (IDR) at 'BB-' and Viability Rating (VR) at 'bb-'.

The revision reflects easing pressure on the target bank's asset quality and profitability, improved capitalisation and stable funding and liquidity position over 1H21, which Fitch expects to have continued into 2H21 and to extend in 2022. 

The revision also reflects the rating agency's change in the outlook on the operating environment score for Romania to stable from negative.

Fitch scores the operating environment for Romania at 'bb+', which is below the 'bbb' implied score, reflecting risks to macroeconomic stability over the medium term.

The operating environment score of 'bb+' has been assigned below the 'bbb' category implied score for Romania, due to the following adjustment reasons: macroeconomic stability (negative).

The revised outlook on the operating environment for Romanian banks to stable reflects the rating agency's view that the impact of the pandemic on Romanian banks' credit profiles has been broadly contained, and any residual risks are mitigated by the country's near-term sound economic recovery prospects. 

The Romanian bank's VR - reflecting bank's intrinsic viability - reflects its solid capitalisation and profitability, improved asset quality and good funding and liquidity, Fitch explains.

The VR of 'bb-' has been assigned below the 'bb' implied score due to the following adjustment reasons: business profile (negative). The business profile score of 'bb-' has been assigned above the 'b & below' implied score, due to the following adjustment reason: business model (positive).

Garanti Bank Romania provides a universal banking offering to retail, SME and corporate customers. 

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iulian@romania-insider.com