DBRS Morningstar Downgrades Rabobank’s LT Issuer Rating to AA (low), Trend Stable

On 29 March 2021, DBRS Morningstar downgraded the Long-Term Issuer Rating of Coöperatieve Rabobank U.A to AA (low) from AA and the Short-Term Issuer Rating to R-1 (middle) from R-1 (high). The trend on all ratings is now Stable.

According to DBRS “The ratings downgrade reflects Rabobank’s consistently weaker profitability and efficiency metrics when compared to similarly rated peers, as well as the headwinds that continue to affect these metrics. The Bank has made some progress over the course of the past few years with regards to cost-base reductions and balance sheet efficiency. However, the combination of more challenging macroeconomic conditions along with the ultra-low interest rate environment has meant that Rabobank continues to face pressure on revenues and difficulties in improving its cost-income ratio and net profitability to levels in line with peers.
The Intrinsic Assessment of AA (low) takes into account the Bank’s very strong retail and commercial franchise in its domestic Dutch market, as well as its global franchise in food & agriculture finance. It also incorporates Rabobank’s solid funding profile, underpinned by a sound deposit base, diversified funding sources and good access to capital markets as well as a large liquidity buffer. The IA incorporates the Bank’s robust regulatory capital position and substantial cushions over minimum regulatory requirements, which should enable Rabobank to withstand the impact of the expected asset quality deterioration due to the coronavirus (COVID-19) pandemic.”.


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