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TEXT-Fitch affirms Banco Exterior's IDR at 'B+'
March 20, 2012 / 1:52 PM / 6 years ago

TEXT-Fitch affirms Banco Exterior's IDR at 'B+'

March 20 - Fitch Ratings has affirmed Banco Exterior, C.A. Banco Universal's
 (Exterior) long-term Issuer Default Rating (IDR) at 'B+'. The Rating
Outlook is Stable. A full list of Exterior's ratings follows at the end of this
press release.	
	
Exterior's ratings reflect its robust asset quality, good profitability and
adequate capital base. The bank's market share, limited revenue diversification,
and the negative effects of government intervention over the bank's business
weigh on its ratings.	
	
Government intervention that pressures Exterior's financial performance could
negatively affect its ratings. Similarly, a sustained deterioration in
profitability or asset quality that pressures capitalization ratios could also
be negative for Exterior's ratings. There is limited upside potential to the
bank's international ratings given Venezuela's current country ceiling of 'B+'.	
	
Exterior's expertise in its niche market (commercial loans to the middle market
and consumer loans) remains crucial in preserving its asset quality ratios,
despite frequent periods of volatility in the Venezuelan economy since the mid
1980s. At 0.4% as of Dec. 31, 2011, Exterior's impaired loans/gross loans ratio
continued to compare favorably to domestic and international peers. Loan loss
reserve coverage of impaired loans also continued to compare favorably to both
domestic and international peer medians.	
	
The stable trend in the bank's profitability continued in 2011 as Exterior
remained among the most profitable relative to domestic peers (privately-owned
universal banks). Exterior's ROAA averaged 4.3% over the four years ending in
2011. Exterior's ample spreads and strong loan growth continue to underpin its
profitability, while still limited income diversification is compensated by its
low credit costs, trends Fitch expects to continue.	
	
However, Fitch notes that Venezuelan banks are not required to adjust for
inflation. Including an adjustment for inflation, Exterior's ROAA would be in
line with similarly rated international peers (emerging market commercial banks
with a long-term IDR of 'B-/B/B+').	
	
As profitability kept pace with asset growth in 2011, Exterior's capital base
has stabilized and remains mostly unencumbered. Fitch believes Exterior's main
challenge in 2012 will be to preserve and enhance its current capital base in
light of potential economic instability in 2013, given the pressures derived of
a complex regulatory scheme and sustained rapid loan expansion.	
	
Exterior is a mid-size bank in Venezuela, with a 4% market share in terms of
total assets at Dec. 31, 2011. Spain's Grupo Bancario Industrial Fierro (GBIF)
controls about 83% of Exterior's equity and has interests in other financial
institutions in Latin America and Miami.	
	
Fitch has affirmed Exterior's ratings as follows:	
	
--Long-term foreign and local currency Issuer Default Ratings (IDR) at 'B+';
Stable Outlook;	
--Short-term foreign and local currency ratings at 'B';	
--Viability at 'b+';	
--Support at '5';	
--Support floor at 'NF'.	
--Long-term national scale rating at 'AA(ven)';	
--Short-term national scale rating at 'F1+(ven)'.	
	
Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.	
	
Applicable Criteria and Related Research:	
--'Global Financial Institutions Rating Criteria', Aug. 16, 2011;	
--'2012 Outlook: Andean Banks', Dec. 20, 2011.	
	
Applicable Criteria and Related Research:	
Global Financial Institutions Rating Criteria	
2012 Outlook: Andean Banks

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