The ratings on Germany-based Bayerische Hypo- und Vereinsbank AG (HVB) reflect its franchise among private and corporate customers in its core markets of Germany, Austria, and Central and Eastern Europe, which provides the bank with a sound and diversified funding base and geographical coverage. The ratings also reflect HVB's progress in executing a range of strategic and cost-cutting initiatives and a stronger focus on credit-risk management, which are expected to gradually further improve its profitability levels. Primary negative rating factors are HVB's weak domestic asset quality, particularly legacy real estate loans, which continue to weigh heavily on earnings, and remaining concentration risks within the group including equity stakes, as well as the weak performance of HVB's domestic retail business. Despite
