piraeus bank group

Rating of sectoral performance 2007-2012: BIC Rating System

The purpose of this study is:
  • to update the BIC Index, in order to assess the sectoral performance, regarding Small and Medium Enterprises (SMEs) for 2012
  • to develop a twelve grade rating system – the BIC Rating System – (from “a +” to “d-”), with the aim of producing a longitudinal study of upgrades and downgrades of sectoral performance during 2007-2012

Best in Class Index (BIC Index)

The main analytical tool used to carry out analysis and ranking of business sectors is the BIC Index, which is the synthesis of three axes, which summarize the key dimensions of measuring entrepreneurial activity, namely liquidity, efficiency and capital structure. In this year’s presentation, we have modified the index, by eliminating the dimension of momentum.

BIC 2012: Stabilization after 4 years of decline

The Greek economic recession still has an obvious impact on domestic entrepreneurial activity. However, after four years of decline, the situation appears to have stabilized.

BIC 2012: Sectors with the best performance

For yet another year the defensive sectors, utility services such as water, waste management (E), health (P), education (O) and telecommunications (61) remain at the top with regards to sectoral performance. Simultaneously, sectors which are associated with shipyard activity (33), as well as the manufacture of cables / wiring and electrical lighting equipment (27) proved to be highly resilient.

BIC 2012: Sectors with the poorest performance

Amongst the sectors with the poorest performance are sectors based on consumption expenditure of households [entertainment (R), media (59+60), trade of vehicles (45), furniture (31) and wood (16)], as well as sectors associated with construction (23), (non-metallic mineral products such as cement, tiles, building materials). A notable case is the sector of basic metals (24) (iron, steel, aluminum), which is influenced both by the decline in construction activity (public and private) and the high cost of energy.

BIC Rating System

The BIC Index allows us to rank the performance of sectors of economic activity from the strongest to the weakest separately for each year from 2007 to 2012. In order to move on to a longitudinal analysis of the development of sectoral performance throughout the period 2007-2012, we have developed a rating system of sectoral performance – the BIC Rating System. According to this system (based on the empirical distribution of the BIC Index for 50 sectors over a period of 6 years, namely a total of 300 observations), each sector is ranked on a 12-grade rating scale. Any improvement or decline in the BIC score of each sector from year to year is reflected by a corresponding upgrade or downgrade of the specific sector.

BIC Rating System 2007-2012: Key findings
  • Continuous deterioration of the sectoral performance due to the recession. The average rating of the 50 sectors of the Greek economy has fallen from “a-” in 2007 to “c” in 2012
  • The average rating stabilized in 2010, 2011 and 2012 at the very low level of “c”
  • The upgrades in 2012 that are of particular interest are:
    • the sector of water transport (50) from “c” to “a-”;
    • the sector of tobacco products (12) from “d+” to “c+”;
    • the sector of metal products (25) from “c+” to “b+”; and
    • the sector of pharmaceutical products (21) from “d+” to “b”.

Ilias Lekkos
Chief Economist