S&P added that the positive outlook reflects the possibility of an improvement in the rating over the next 12 to 18 months if BCP continues to strengthen its domestic profit without increasing its risk appetite, maintaining its advantages in terms of efficiency and revenue diversification while defending its market share in Portugal.

“This action in the rating reflects our conviction that BCP is gradually improving its domestic profitability while progressing in cleaning the balance sheet and preserving a better capital position,” according to a statement.

In the note, S&P stated that it maintained BCP’s long-term rating at ‘BB’, a level still speculative (junk).

S&P pointed out that, despite the economic slowdown in Europe and the environment of low-interest rates, it anticipates that BCP’s results in Portugal will grow supported by the reduction of losses with non-performing loans.

At the same time, they expect BCP to continue to defend its solid market share in the concentrated Portuguese banking system, where it holds market shares of around 17.5 percent in loans and deposits.

S&P praised that BCP remains more efficient than its domestic and international peers, having restructured significantly before some pairs in 2011.

The financial rating agency stated that, unlike its domestic peers, which are focused on Portugal, BCP benefits from the diversification that results from its international operations. The financial rating agency expects the bank to continue to improve its capital ratios and remain focused on reducing the stock of non-performing loans, to reach a ratio of around 6 percent by the end of 2020.

But S&P warned that the outlook for BCP’s rating could be downgraded from positive to stable if BCP proves incapable of improving domestic results, if litigation risks in Poland turn out worse than expected and if the respective losses end up significantly reaching BCP’s consolidated capital position, or if the bank continues with excessively aggressive growth, damaging its financial profile.

On 3 October, the Court of Justice of the European Union said that there are abusive clauses in loans made in Poland in Swiss francs, including by BCP, admitting the possibility of being annulled under European law.

At issue is a request for annulment made by Polish citizens to the courts in Poland and which reached the court concerning the loans in Swiss francs contracted by them in 2008 in Poland, namely housing loans, which led to an increase in household debts when the Swiss franc appreciated against the local currency, the zloty.