Moody’s takes negative rating actions on seven Bangladeshi banks


News Desk :
Moody’s Investors Service has lowered the long-term deposit and issuer ratings of six Bangladeshi banks while confirming the ratings for another bank a day after downgrading the government’s rating.

Moody’s cut the ratings for BRAC Bank Limited, The City Bank Limited, Dutch-Bangla Bank Limited, Eastern Bank Limited, NCC Bank Limited and Premier Bank Limited while confirming the rating for Mercantile Bank Limited, according to a statement released on Wednesday.

Moody’s confirmed the Baseline Credit Assessments of all the other banks except for NCC Bank and Premier Bank, who were downgraded from B3 to B2, while also confirming MBL’s B2 long-term deposit and issuer rating, reports

At the same time, Moody’s has changed the outlooks to stable from under review on the long-term ratings of the seven banks.
Wednesday’s rating actions follow the Bangladesh government’s downgrade of the long-term issuer rating to B1 from Ba3, saying the outlook is stable but gross foreign exchange reserves will remain below $30 billion for the next two to three years.

The downgrade of the sovereign rating was driven by Bangladesh’s heightened external vulnerability and liquidity risks that are persistent, and the sovereign’s institutional weaknesses uncovered during the ongoing crisis as the government prepares to unveil its budget for FY24 later this week, Moody’s said.
Moody’s rating action concludes the review for downgrade initiated on Dec 12, 2022.


The ratings of Social Islami Bank Limited (Caa1 negative, caa2) are not affected by these rating actions, the statement added.
The confirmation of BRAC Bank’s B1 BCA reflects its better-than-peer-average asset quality and capital compared with its peers, strong deposit franchise and access to funding, and good liquidity, Moody’s said.

The confirmation of City Bank, Dutch-Bangla Bangla and Eastern Bank’s B2 BCAs reflects their moderate asset quality, profitability and capitalisation, support from their stable deposit franchises and adequate liquidity, it added.

The downgrade of Premier Bank and NCC Bank’s BCAs reflects their deteriorating asset quality. The b3 BCAs also consider the banks’ modest deposit franchise and higher costs of funding compared with other rated Bangladeshi banks.
The confirmation of Mercantile Bank’s B2 long-term deposit and issuer ratings reflects the bank’s B3 BCA and Moody’s expectation of a moderate probability of support from the government in times of need, which results in one-notch uplift incorporated in its B2 ratings.

Mercantile Bank’s b3 BCA reflects the bank’s deteriorating asset quality and profitability, balanced by stable capital, funding and liquidity, Moody’s said.
The stable outlooks on the long-term deposit and issuer ratings of the seven banks are in line with the stable outlook of Bangladesh’s sovereign rating.