Ceska Sporitelna's risk-adjusted capital ratio has weakened from very strong levels amid balance sheet growth and lower earnings retention since 2019. At the same time, the bank has built up sizable amounts of additional loss-absorbing capacity that is a protection to senior creditors in the unlikely event of a resolution of the bank. We therefore affirmed the long- and short-term issuer credit ratings on Ceska at 'A/A-1', and its resolution counterparty ratings at 'A+/A-1'. We lowered our issue rating on the bank's senior non-preferred debt to 'BBB+' from 'A-'. The negative outlook on the long-term issuer credit rating reflects our downside scenario of an entrenched recession in the Czech Republic over the next 12-24 months that could challenge Ceska's risk
