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Fitch Affirms Banco G&T Continental's IDR at 'BB' Following Peer Review; Outlook Stable
May 15, 2015 / 6:27 PM / 2 years ago

Fitch Affirms Banco G&T Continental's IDR at 'BB' Following Peer Review; Outlook Stable

(The following statement was released by the rating agency) NEW YORK, May 15 (Fitch) Fitch Ratings has affirmed Banco G&T Continental's (G&TC) long-term Issuer Default Rating (IDR) at 'BB' and Viability Rating (VR) at 'bb' following Fitch's peer review of Guatemala's largest banks. The Rating Outlook on the long-term IDR remains Stable. A full list of rating actions follows at the end of this press release. G&TC'S KEY RATING DRIVERS - IDRs, VR, NATIONAL RATINGS AND SUPPORT G&TC's IDRs and VR are highly influenced by its sound loan portfolio quality, and high exposure to sovereign risk. The bank's ratings also factor in its good domestic franchise, low risk appetite, modest profitability, moderate capitalization ratios and stable deposit base. The Support Rating of '3' reflects Fitch's opinion that the bank maintains a moderate probability of support from the state, given its systemic importance in the banking system. The current Support Rating Floor ('BB-'), one notch below the sovereign rating, is explained by the moderate financial flexibility of the government to provide support to systemically important banks in the country and the significant presence of foreign currency funding. G&TC's national ratings were also affirmed with a Stable Outlook as the bank's relative strength in the local market remains unchanged. G&TC's loan portfolio quality is moderately better than most of its competitors, given the bank's target customer segments. Although the portfolio is well-diversified by economic sector, it has a relatively high debtor concentration and moderate exposure to dollar-denominated loans. The bank has high exposure to the Guatemalan sovereign ('BB'/Outlook Stable). As of December 2014, sovereign securities and central bank reserves accounted for 37.1% of G&TC's total assets or 4.7x of its Fitch Core Capital. G&TC has a lower risk appetite relative to peers, given its corporate customer base and conservative underwriting standards and risk controls. Its corporate segment, high proportion of securities holdings and dollar-denominated loans, as well as its high funding costs result in lower profitability than that of its main competitors. Fitch expects that the bank's profitability and internal capital generation will remain low in the short term, although it may improve at a slow pace. One of G&TC's strengths is its broad and stable base of depositors as well as the high proportion of liquid assets in relation to deposits (61.1% as of December 2014). In addition, the bank has a relatively well-balanced mix of deposits. Deposit stability, together with an adequate level of liquid assets, supports G&TC's liquidity profile. G&TC's RATING SENSITIVITIES - IDRs, VR AND NATIONAL RATINGS G&TC IDRs, VR and National Ratings' upside potential is considered limited given the bank's high exposure to the sovereign. G&TC's ratings could be pressured downward if the bank reduces its profitability metrics and reaches a Fitch Core Capital level below 10%. Fitch has affirmed the following ratings: G&TC: --Long-term foreign currency IDR at 'BB'; Outlook Stable; --Short-term foreign currency IDR at 'B'; --Long-term local-currency IDR at 'BB'; Outlook Stable; --Short-term local-currency IDR at 'B'; --Viability Rating at 'bb'; --Support at '3'; --Support Rating Floor at 'BB-'; --National scale long-term rating at 'AA-(gtm)'; Outlook Stable; --National scale short-term rating at 'F1+(gtm)'. Contact: Primary Analyst (G&TC) Mark Narron Director +1-212-612-7898 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Primary Analyst (Conticredit, FG&TC, GTC, FG&TC CR) Alvaro Castro Associate Director +503 2516-6615 Secondary Analyst Rolando Martinez Director +503 2516-6619 Committee Chairperson Theresa Paiz Fredel Senior Director +1-212-908-0534 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at 'www.fitchratings.com' and 'www.fitchcentroamerica.com'. Applicable Criteria and Related Research: --'Global Bank Rating Criteria' (March 2015). Applicable Criteria and Related Research: Global Bank Rating Criteria here Additional Disclosure Solicitation Status 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 WEBSITE '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. 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.

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