Banque Cantonale Vaudoise

S&P Global Ratings' outlook on Switzerland-based BCV is stable, reflecting our view of a very high likelihood of support for the bank from the Vaud (Canton of) (AAA/Stable/--) in the event of financial stress. Even if BCV's credit quality changed to the extent that we revised its group stand-alone credit profile (SACP) downward or upward by one notch, we would not lower or raise our long-term rating on the bank, all else being equal. This is because, given our 'AAA' rating on the Canton of Vaud, any one-notch revision of the SACP would be offset by an opposite change in the uplift we attribute for extraordinary government support. All else being equal, a two-notch revision of BCV's group SACP, upward

...Banque Cantonale Vaudoise (BCV) displays strong metrics and should remain resilient to economic conditions over the next two to three years. BCV has strong fundamentals and is the second-largest Swiss Cantonal bank by assets, just ahead of Luzerner Kantonalbank. It achieved a net profit of Swiss Franc (CHF) 240 million and a return on average common equity (ROE) of 13% in the first six months of 2023--the highest among Swiss cantonal banks. The solid 2023 first-half results were mainly driven by a strong increase in net interest income; slight credit risk provisioning withdrawal, underpinning BCV's high credit quality resiliency; and thanks to operating expenses only moderately increasing by 3% year-on-year. We expect higher provisioning expenses in the second half of 2023 to prudentially factor in the expected effect of higher rates on some clients' creditworthiness....

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