Belfius Bank SA/NV

The stable outlook reflects our view that despite uncertainty and an increasingly challenging environment the creditworthiness of Belfius Bank will be preserved. The bank's profitability, supported by its bancassurance model, also positions it well to deliver its 2025 strategy. We could lower the ratings if Belfius departs from its current capital management policy. This could happen if the bank unexpectedly up-streams higher dividends to its shareholders (potentially ahead of an IPO) or faces significant unforeseen one-off costs that weaken its RAC ratio to below 10%. We could also lower the rating if we see a risk that profitability is significantly dented after the rebound observed in 2021. We consider an upgrade remote. However, we could consider raising the ratings if

...Belfius Bank SA/NV (Belfius) should be able to preserve its sound solvency levels in the coming years. S&P Global Ratings anticipates that Belfius' risk-adjusted capital (RAC) ratio will hover at about 10.6%-11.1%, compared with 10.9% at year-end 2021. Although we expect S&P Global Ratings' risk-weighted assets (RWAs) to increase 4.5%-5.7%, slightly faster than loan portfolio growth due to the continuous shift to more commercial lending, this will be financed with retained profits. Overall, we forecast that Belfius' return on equity (ROE) will be about 7.0%-7.5% by year-end 2023, compared with 6.4% on average in 2016-2020. Rising interest rates will only boost net interest income in the medium term but we expect revenue will still be sufficient to absorb increasing operating costs amid inflationary pressure and likely higher credit losses anticipated due to the challenging operating environment....

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