Reuters logo
Fitch Affirms Banco Interamericano de Finanzas' IDR at 'BBB-'; Outlook Stable
May 18, 2017 / 10:17 PM / in 5 months

Fitch Affirms Banco Interamericano de Finanzas' IDR at 'BBB-'; Outlook Stable

(The following statement was released by the rating agency) NEW YORK, May 18 (Fitch) Fitch Ratings has affirmed Banco Interamericano de Finanzas S.A.'s (BanBif) Long-term Foreign and Local Currency Issuer Default Rating (IDR) at 'BBB-'. A full list of rating actions is at the end of this release. The Outlook remains Stable given Fitch's expectations for a sustained financial and risk profile in line with the bank's current ratings. KEY RATING DRIVERS VR and IDRS BanBif's Long-Term Local and Foreign Currency IDRs are driven by its Viability Rating (VR) of 'bbb-'. The bank's VR is highly influenced by its comparatively moderate franchise. Banbif's ratings also consider its tight capitalization, sound asset quality, moderate profitability, stable funding and solid liquidity. BanBif is a medium-sized universal bank whose size grew steadily over the past eight years though it remains much smaller than the four major banks that dominate Peru. BanBif's local market share was approximately 3.6% of total loans and 3.8% of total deposits at December 2016. The bank has been consolidating and strengthening its competitive advantage in the second-tier market, achieving consistent, albeit modest, performance metrics while maintaining sound asset quality. BanBif's Fitch Core Capital (FCC) ratio is comparably lower than both local and international peers, as growth exceeded internal capital generation due to the rapid increase of credit costs in recent years. Given BanBif's stable performance and focus on less risky business sectors, Fitch views the bank's capitalization as adequate. During 2016 a deceleration in asset growth contributed to an improvement in the bank's FCC-to-risk weighted assets (RWA) ratio to 8.3% at YE16 from 7.8% at YE15. Although the bank's FCC ratio is relative low compared with international peers (universal commercial banks in the 'bbb' operating environment), Fitch expects lower asset growth to reduce pressure on capital. Sustained loan growth, resilient margins despite an uncertain operating environment, and the improvement in efficiency underpinned BanBif's financial performance. Nevertheless, relatively high credit cost related to loan quality deterioration continues to weigh on profitability metrics. The bank has a relatively diversified funding structure and is reliant on deposits (77% of the total funding at December 2016; 78% at YE15), which are only moderately concentrated. Liquidity risk is carefully monitored, and the bank's liquidity position is ample, as BanBif held about PEN3.6 billion of cash and equivalents that represented 44% of the total short-term funding as of Dec. 31, 2016. Deposits in USDs represent 50% of total funding given high financial dollarization within the country. BanBif's asset quality remains good despite the Peruvian economy's lower growth trajectory in recent years which led to a rapid increase in non-performing loans (NPLs). However, BanBif continues to exhibit one of the lowest delinquency levels in the Peruvian banking system. SUPPORT RATING AND SUPPORT RATING FLOOR BanBif's Support Rating of '4' and Support Rating Floor of 'BB-' indicate its systemic importance for the Peruvian banking system. As the fifth largest Peruvian bank, Fitch believes that there would be a limited propensity for support from the government, should it be required. RATING SENSITIVITIES IDRS and VR Upside potential for the international ratings is heavily contingent on a material improvement in capitalization levels, which is currently one of the weakest elements under Fitch's rating approach. An upgrade on the VR and IDRs could occur if the bank is able to reach and sustain an FCC ratio of at least 13%, while avoiding material deterioration of its other financial and qualitative credit fundamentals. A sustained increase of BanBif's risk appetite and / or deterioration in its loan portfolio that erodes its profitability and drives overall capital cushions (measured as FCC plus excess of reserves) below 8% could pressure ratings downward. NPLs consistently above 2.5% and operating profits-to-risk weighted assets ratios consistently below 1.2% also would be negative for creditworthiness. SUPPORT RATING AND SUPPORT RATING FLOOR Upside potential for the Support Rating (SR) and Support Rating Floor (SRF) is limited and can only occur over time with a material growth of the bank's systemic importance. These ratings could be downgraded if the bank loses material market share in terms of loans and customer deposits. Fitch has affirmed the following ratings: --Long-Term Foreign and Local Currency IDR at 'BBB-'; Outlook Stable; --Short-Term Foreign and Local Currency IDR at 'F3'; --Viability Rating at 'bbb-'; --Support Rating at '4'; --Support Rating Floor at 'BB-'. Contact: Primary Analyst Mark Narron Director +1-212-612-7898 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Sergio Pena Associate Director +571 484 6770 Committee Chairperson Alejandro Garcia Garcia, CFA Managing Director +1-212-908-9137 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below