November 17, 2017 / 8:04 PM / a year ago

Fitch Revises Outlooks for Five Argentine FIs to Positive Following Sovereign Action

(The following statement was released by the rating agency) NEW YORK, November 17 (Fitch) Fitch Ratings has revised the Outlook on the Long-Term Issuer Default Ratings (IDRs) for certain Argentine financial institutions (FIs) to Positive from Stable following Fitch's revision of the Outlook on Argentina's Sovereign Rating (SR) on Nov. 7, 2017. The entities affected by this rating action are: --Banco Santander Rio S.A.; --BBVA Banco Frances S.A.; --Banco Macro S.A.; --Banco Supervielle S.A.; --Tarjeta Naranja S.A. At the same time, Fitch has affirmed the Foreign and Local Currency Issuer Default Ratings (IDRs) of Banco Hipotecario S.A. with a Stable Outlook. Today's actions on selected FIs are exclusively driven by the Sovereign Outlook revision. The ratings of the Argentine issuers that are not mentioned above remain unchanged and were not affected by this portfolio review. The rated banks are among the largest private-sector universal commercial banks in the country. While the IDRs of Santander Rio and BBVA Frances are driven by parent support, the IDRs of Macro, Supervielle and Hipotecario are driven by their Viability Ratings (VRs), and in the case of TN, its standalone intrinsic financial profile. In Fitch's view, regardless of their overall adequate financial condition, these entities' ratings are constrained by the low SR of Argentina and the still volatile economic and operating environment, although some recent structural improvements to Argentina's policy framework could benefit the bank's performance in the medium term. Meanwhile, the Outlook on Hipotecario's IDRs remains Stable as the bank faces the challenge of improving its funding profile and its profitability. KEY RATING DRIVERS IDRs SANTANDER RIO AND BBVA FRANCES The likelihood of parent support drives the Local Currency IDRs of Santander Rio and BBVA Frances. Despite Banco Santander, S.A.'s (SAN; A-/Stable) and Banco Bilbao Vizcaya Argentaria, S.A.'s (BBVA; A-/Stable)strong financial profile, Santander Rio and BBVA Frances' rating uplift from support is limited to one notch above Argentina's Local Currency Long-Term IDR and faces as well the downside risks of high economic stress and the country's tentative policy reforms. MACRO Macro's VR and IDRs reflect its higher risk appetite and growth strategy relative to international and domestic peers, which is balanced by its ample capital cushion, as well as its diverse funding and ample liquidity. SUPERVIELLE Supervielle's VR and IDRs are driven by its improved capitalization, adequate funding and liquidity profile, and gradually strengthening franchise. Fitch also considers the bank's adequate profitability and asset quality, although these are somewhat distorted by high inflation. TN TN's IDRs are driven by its higher risk appetite relative to bank peers and its business concentration in credit cards targeting low- and middle-income segments. Ratings also consider TN's reliance on short-term payables to merchants, which is partly mitigated by consistent double-digit operating ROAAs, as well as adequate tangible common equity of 20% of tangible assets at mid-2017. HIPOTECARIO Hipotecario's VR and IDRs reflect its adequate capitalization, despite a steady decline in recent years due to elevated asset growth. The ratings also consider the bank's stable asset quality and adequate profitability. RATING SENSITIVITIES Local and Foreign Currency IDRs SANTANDER RIO AND BBVA FRANCES Santander Rio and BBVA France's IDRs are sensitive to a change in Fitch's views on their parents' ability and propensity to provide support. Santander Rio and BBVA Frances' IDR and VR would likely move in line with any change to Argentina's SR. MACRO, SUPERVIELLE AND TN Upside potential in the ratings of Macro, Supervielle, and TN is contingent upon an upgrade of the SR. A negative rating action or deterioration in the operating environment that leads to a material deterioration in their financial profiles would negatively pressure the ratings of Supervielle, Macro and TN. HIPOTECARIO In addition to a sovereign upgrade, upward ratings potential for Hipotecario is contingent on the successful implementation of the bank's new strategy, which aims to improve its funding mix and earnings while maintaining adequate capital levels. The ratings could be negatively affected by a sustained decline in liquidity or capital due to deterioration in financial performance or asset quality. Fitch has taken the following rating actions: Santander Rio -- Long-Term Local Currency IDR affirmed at 'B+'; Outlook revised to Positive from Stable. BBVA Frances -- Long-Term Local Currency IDR affirmed at 'B+'; Outlook revised to Positive from Stable. Macro -- Long-Term Foreign and Local Currency IDRs affirmed at 'B'; Outlook revised to Positive from Stable. Supervielle -- Long-Term Foreign and Local Currency IDRs affirmed at 'B'; Outlook revised to Positive from Stable. TN -- Long-Term Foreign and Local Currency IDRs affirmed at 'B'; Outlook revised to Positive from Stable. Banco Hipotecario S.A. (Hipotecario) -- Long-Term Foreign and Local Currency IDRs affirmed at 'B'; Outlook Stable. Contact: Mark Narron (Primary Analyst - Santander Rio, BBVA Frances, Macro, Supervielle and TN. Secondary Analyst - Hipotecario) Director +1-212-612-7898 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Andre Ukon (Primary Analyst - Hipotecario) Director +1-212-908-9155 Santiago Gallo (Secondary Analyst - Santander Rio, BBVA Frances, Macro, Supervielle and TN) Director +56 2 2499 3320 Committee Chairperson Theresa Paiz Fredel Senior Director +1-212-908-0534 Media Relations: Benjamin Rippey, New York, Tel: +1 646 582 4588, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here 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. 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