Update: Erste Group Bank AG

The stable outlook on Erste reflects our view that, over the next 18-24 months, it will preserve a solid balance sheet, in particular sound asset quality metrics and strong liquidity buffers, despite macroeconomic uncertainties from the current war in Ukraine and residual risks from the pandemic. It also reflects our assumption that Erste will maintain solid profitability and capital build-up capacity. We could lower our rating on Erste if we see a more material or prolonged setback for profitability and asset quality, particularly if the bank becomes loss-making. This would challenge our current view that Erste demonstrates superior resilience in difficult markets. We could also lower the rating if Erste's ALAC ratio decreases sustainably below the relevant 3% threshold within

...Erste Group Bank has a well-managed business model with a strong franchise in retail, small and midsize enterprises (SMEs), and corporate banking across Austria and six core strategic countries in CEE. The bank is not directly affected by the war in Ukraine because it does not have subsidiaries in Ukraine, Belarus, or Russia. That said, we expect the bank to experience knock-on effects because of higher uncertainties for its client base in certain sectors like manufacturing and construction. Elevated inflation rates are also a strain for borrowers' debt repayment capacities, particularly in the bank's retail segment....

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