Hypo Tirol Bank AG

The stable outlook on Hypo Tirol reflects our view that the bank will maintain very strong capitalization, as measured by our RAC ratio, and perform financially well over the next two years. Despite economic challenges stemming from geopolitical risks and the subdued economic growth in Austria, the bank's asset quality and balance sheet will remain resilient, in our view. We consider Hypo Tirol a government-related entity (GRE) and our rating on the bank is supported by our credit view of the owner. As such, a downgrade of Tyrol by one notch would lead us to downgrade the bank. A change in Hypo Tirol's role or link with the state could also lead us to reassess the bank's status as a

...S&P Global Ratings expects Hypo Tirol Bank will remain resilient despite a slowdown in the Austrian economy. This resilience reflects its market-leading corporate and retail banking franchise in the Austrian state of Tyrol and its prudent risk management. We think the bank will maintain its regional competitive edge in Tyrol. Its relatively small size, regional focus, and product line concentration remains a weakness compared with other banks. Despite some pressure on its asset quality, our base case is that bank will be able to maintain sound risk performance. Hypo Tirol's capitalization is the highest in Austria and a key rating strength. The bank has increased its capital ratios materially over the last decade on the back of earnings retention and derisking efforts. Our main measure for a bank's capitalization, the risk-adjusted capital (RAC) ratio, reached 20.0% in 2023. This makes Hypo Tirol the best capitalized bank in Austria in terms of RAC. We expect the ratio to keep increasing...

Full Report