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TEXT-Fitch affirms Tarjeta Naranja S.A.
July 2, 2012 / 8:11 PM / 5 years ago

TEXT-Fitch affirms Tarjeta Naranja S.A.

(The following statement was released by the rating agency)
    July 2 - Fitch Ratings has affirmed Tarjeta Naranja S.A.'s 
(TN) ratings as detailed at the end of this release. 

In addition, Fitch has also assigned a national short-term rating of 'A1+(arg)' 
to TN's class XVIII series I short-term notes for up to ARS40 million and a 
national long-term rating of 'AA(arg)' to class XVIII series II notes for up to 
ARS60 million. The maximum amount to be issued under class XVIII is ARS200 
million.

TN's ratings reflect its strong growth; maintenance of its sound historical 
profitability, asset quality, and liquidity; and its satisfactory capital base. 
The ratings also reflect the benefits of belonging to the Tarjetas Regionales 
Group (owned by Banco de Galicia y Buenos Aires), which is the largest credit 
card issuer in Argentina and has ample experience in the business. Additionally,
the potentially volatile operating environment in Argentina was also factored in
the ratings.

Despite TN's stand-alone strength, the low sovereign ratings add significant 
ratings compression to most Argentine issuers. Upside rating potential for TN 
lies in a sovereign upgrade. Downside potential exists in significant 
deterioration in the operating environment, affecting TN's asset quality and 
capitalization. 

TN's sound profitability is based on strong revenue generation and growth, 
adequate cost efficiency and healthy asset quality. TN's lending has grown 
significantly in recent years. In 2010, loan growth resumed after a sharp 
slowdown suffered in 2009 due to lower demand and a self-imposed restriction 
following the economic slowdown. Asset quality ratios have historically been 
very good considering its activity and the segments served, based on 
conservative credit limits, good scoring systems and close monitoring of early 
delinquencies. However, nonperforming loans (NPLs) have slightly risen since the
second half of 2011 (2H'11) due to the economy's slowdown, accounting for a 
still low 3.79% of total loans at March 31, 2012, and were fully reserved. 

TN's liquidity is strong, supported by the very short-term nature of its 
lending. Also, it has had access to capital market funds through bond issuance, 
interbank lending, and loan securitizations, helping extend funding maturity. 
Exposure to foreign currency risk is low.

TN's capital base is ample, with an equity/assets ratio historically above of 
20% (23.03% at March 31, 2012). Despite significant growth, strong internal 
capital generation has allowed it to maintain a satisfactory capital base.

TN was established in 1985 in the Province of Cordoba. Since 1996, it has 
expanded significantly and now operates in most of the country. At March 31, 
2012, Tarjetas Regionales (TN and Tarjetas Cuyanas S.A.) had 6.6 million credit 
cards and more than 2.5 million clients.

TN is 100% owned by Tarjetas Regionales S.A., which is 77% owned by Banco de 
Galicia y Buenos Aires, the third largest private sector bank in Argentina by 
deposits.

Fitch has affirmed the following ratings for TN:

--Long-term local and foreign currency Issuer Default Rating (IDR) at 'B'; 
Stable Outlook;

--Short-term local and foreign currency IDRs at 'B';

--National long-term rating at 'AA(arg)'; Stable Outlook;

--National short-term rating at 'A1+(arg)';

--Support rating at '5';

--USD200 million unsubordinated fixed-rate bonds long-term local currency rating
at 'B/RR4' and National long-term rating at 'AA(arg)';

--National long-term rating on senior unsecured notes at 'AA'(arg); Stable 
Outlook;

--National short-term rating on senior unsecured notes at 'A1+'(arg).

 (Caryn Trokie, New York Ratings Unit)

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