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Fitch: Spanish Credit Cooperatives Resilient, But Challenges Remain
December 17, 2014 / 4:42 PM / 3 years ago

Fitch: Spanish Credit Cooperatives Resilient, But Challenges Remain

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Spanish Credit Cooperatives - Peer Review here LONDON, December 17 (Fitch) Fitch Ratings says the four Spanish credit cooperatives it rates have proved fairly resilient to Spain's recession. However, they still face challenges to further improve asset quality and profitability in 2015. The four rated Spanish credit cooperatives - Grupo Cooperativo Cajamar (GCC; BB/Negative), Caja Laboral Popular (Laboral; BBB+/Stable), Caja Rural de Navarra (CRN; BBB+/Stable) and Caja Rural del Sur (CRS; BBB/ Positive) - benefit from high earnings retention rates, which allowed them to build ample loss absorption buffers during the crisis. Together with their generally lower exposure to the real estate sector and ample loan impairment reserve coverage levels at Laboral, CRN and CRS, this supports their sound standalone credit profiles. GCC is the only cooperative whose Long-term Issuer Default Rating is currently driven by state support. However, its credit fundamentals have also improved, albeit from a lower level. The size of the four cooperatives' legacy real estate exposure and the economic performances of their home regions differ and result in significant divergence in asset quality indicators and standalone credit profiles. All four cooperatives managed to reduce their stock of problem assets in 1H14 and Fitch expects this trend to continue in 2015. Laboral and CRN have better than sector average problem asset ratios, and CRS's indicators are just slightly below the average, weighted down by the high unemployment rate in its home region. GCC's legacy real estate exposure is higher and results in weaker ratios than peers' and a higher proportion of capital tied to unreserved problem assets. The combination of low interest rates and muted business volume growth will challenge future profitability. Containing operating costs will be pivotal to support their financial flexibility. Lower impairment charges could also provide some relief to bottom-line earnings. The four credit cooperatives' funding profiles primarily comprise retail customer deposits, which have proved stable and support their comfortable liquidity positions. For more details on the sector, see "Spanish Credit Cooperatives - Peer Review", available at or by clicking the link above. Contact: Josu Fabo, CFA Director +44 20 3530 1513 Fitch Ratings Limited 30 North Colonnade London E14 5GN Belen Vazquez Associate Director +44 20 3530 1504 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: Additional information is available on 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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