Investing.com – S&P Global Ratings raised its long- and short-term issuer credit ratings on Poland-based (WSE:ALR) to ’BBB-/A-3’ from ’BB+/B’ on Tuesday. The outlook is stable. The ratings firm also affirmed its long- and short-term resolution counterparty ratings on the bank at ’BBB/A-2’.
The upgrade reflects Alior’s progress over 2025 on diversifying its lending activities and actively reducing its volume of nonperforming loans. The portfolio has diversified further, with a rising share of lower-risk products like mortgages and loans to small and midsize enterprises. Over 2025, particularly in the fourth quarter, Alior made significant progress in reducing its volume of NPLs, resulting in a year-end NPL ratio of 5.7% in S&P’s calculation, after 6.4% in third-quarter 2025 and 6.9% in 2024.
S&P expects cost of risk of 60-80 basis points, sustainably lower than those of a few years ago, reflecting the bank’s stricter lending standards and reduced share of risky lending. Alior targets to reduce its NPL ratio to below 5% by 2026, because this is a prerequisite to increase shareholder distributions to up to 75% of annual net income. With net profits of Polish zloty 2.4 billion, the bank maintained its profitability in 2025, despite the 175 basis point reduction in reference rates over 2025.
For year-end 2025, S&P expects the bank’s risk-adjusted capital ratio to have improved to about 14.1% from 13.0% a year before. The ratings firm considers the RAC ratio could decrease to 13.0%-14.0% by 2027, which is still a strong level. S&P expects a receding net interest margin of about 4.8% in 2027, good growth in fee income, and moderate growth in operating expense to translate into net profits of about PLN2 billion annually in its base-case scenario for 2026 and 2027.
The rating on Alior includes one notch of group support from Powszechny Zaklad Ubezpieczen, its largest shareholder. In June 2025, PZU signed a memorandum of understanding with Bank Polska Kasa Opieki S.A., where the parent owns 20%, to investigate a takeover of PZU by Pekao, creating one of the largest financial institution groups in Europe. S&P assumes the potential for extraordinary group support from PZU or Pekao would remain, continuing to support the rating on Alior.
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