BEIRUT: Moody's downgraded Wednesday the ratings of Bank Audi, BLOM Bank, and Byblos Bank, days after it lowered the mark of Lebanon's issuer rating to Caa1 from B3.
The three banks' long-term deposit ratings and Baseline Credit Assessments (BCA) were downgraded to Caa1 from B3, while their long-term Counterparty Risk Ratings were lowered to B3 from B2.
Meanwhile, BLOM Bank's long-term foreign currency deposit certificates were also brought down to Caa1 from B3.
The outlook on the long-term deposit ratings was changed to stable from negative, a common procedure when a bank's rating is downgraded. The outlook on BLOM Bank's deposit certificates was "also assigned as stable."
The rating agency attributed the "government's weakened creditworthiness" for this move, which weighs on the "credit profile of the three banks given the high interlinkages between their balance sheets and sovereign credit risk."
Despite the rating downgrade, which is linked to the sovereign rating action, Moody's acknowledged "that the banks' own financial fundamentals have remained relatively resilient against operating environment pressures."
This comes in the wake of Fitch Ratings revising the outlooks on Bank Audi and Byblos Bank to negative from stable, affirming the respective banks' LongTerm Issuer Default Ratings at 'B'.
The three banks remain profitable, however, with a "net income to tangible assets ranging from 0.6% to 1.4% in the nine months to September 2018, and their latest reported capital ratios, while modest when viewed against concentrations to the sovereign, were reasonably above higher regulatory requirements that were implemented as of the end of 2018."
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