Moody’s has a more favorable view of Raiffeisen's capital quality. The long-term deposit rating for the banking group has been raised to «Aa2» from the previous «Aa3,» according to a study published on Thursday.

Moody's has also upgraded the long-term senior unsecured ratings, such as bonds. This rating rises to A2 from A3.

Outlook for Bond Ratings Remains Positive

The cooperative banking group was downgraded by Moody’s in 2018 following the scandal involving former Raiffeisen CEO Pierin Vincenz.

The outlook has been adjusted in line with the new ratings. For long-term deposit ratings, the outlook is now «stable,» revised from «positive.» However, the outlook for long-term bond ratings remains positive.

Strong Capital Quality and Income Diversification

In its assessment, the agency highlights the banking group's strong capital quality. The upgrade reflects the group's improved financial strength. Moody’s acknowledges the ongoing progress Raiffeisen has made in expanding its business profile to diversify its income sources. This has led to reduced dependence on income from the mortgage business.

This diversification is expected to be supported by a growing share of corporate loans and an increased share of fee and commission income from the bank’s expanding wealth management activities. Ultimately, this reduces the group's reliance on net interest income, providing greater stability against a potential further decline in interest rates in Switzerland.