Reuters logo
Fitch Affirms Banco Industrial do Brasil SA's Ratings at 'BB'/'AA-(bra)'
May 22, 2017 / 7:41 PM / 6 months ago

Fitch Affirms Banco Industrial do Brasil SA's Ratings at 'BB'/'AA-(bra)'

(The following statement was released by the rating agency) RIO DE JANEIRO/SAO PAULO, May 22 (Fitch) Fitch Ratings has affirmed the Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of Banco Industrial do Brasil SA (BIB) at 'BB'. The IDR Outlook is Negative. Fitch also affirmed the bank's National long-term rating at 'AA-(bra)', as well as its other ratings. The National rating Outlook is Stable. See the full list of rating actions at the end of this release. KEY RATING DRIVERS The affirmation of the IDRs of the BIB follows the affirmation of the bank's Viability Rating (VR) at 'bb'. The VR considers the bank's experience and continuous focus on small- and medium-sized enterprises (SMEs), a segment in which the bank has managed to operate with relatively low losses even considering Brazil's current challenging operating environment. The ratings also take into account the institution's adequate financial performance, which is above its peers' average, notably evidenced by maintenance of the good asset quality, liquidity and capitalization throughout different cycles of the Brazilian economy. On the other hand, the ratings are limited by the BIB's size and by concentrations of assets and liabilities inherent to its business model. The Negative Outlook for the IDRs reflects the strong influence of a more challenging operating environment on the main indicators of credit quality and profitability of medium-sized banks such as BIB. BIB has a stable business model, characterized by the maintenance of low leverage, strictness and conservatism in terms of risk appetite, and retaining its high liquidity position. Generally, BIB avoids positioning itself as the first-choice bank of its clients, considering its size. The bank has been relatively successful in finding better structures for SME lending operations, with additions of new guarantees in order to reduce risks in a more challenging economic environment, and seized opportunities to buy its portfolio of companies with low risk profile. BIB's strategic objectives have been consistent over the years; 89% of the total portfolio is in the SME segment and only 11% in payroll loans in 2016 (14% in 2015), a segment in which it mainly operates in loan renewals, with no plans to expand the portfolio into new customers. In Fitch's view, BIB's underwriting standards are sound, with credit the main risk to operations. BIB has an adequate risk control structure, reflected by its good asset quality indicators. Even with the more challenging economic environment, BIB has maintained credit quality indicators in the past three years. The index of loans with arrears of more than 90 days was only 2.6% in December 2016 and 1.0 % of the total in 2015 and 2014. The concentration of the bank's credit portfolio remained high, but controlled: the 20 largest clients accounted for 26% in 2016 versus around 30% of the portfolio in 2015 and 2014. Credits classified in "D-H" categories represented 1.1% in 2016 (3.4% in 2015 and 1.8% in 2014) - a better result than the average of its peers. BIB reported more favorable results even in the face of a weak macroeconomic performance scenario. This was because financing costs improved, and competition in the SME segment was more moderate, which contributed to the generation of good spreads. Fitch expects BIB's profitability to remain adequate in the coming years. BIB has a comfortable capital base, which is reflected in its FCC index (15.7% in 2016, 16.0% in 2015 and 16.3% in 2014). In Fitch's view, the bank has good-quality capital, basically composed of Tier I capital. With regard to funding, BIB has diversified its base since it has been able to access foreign trade lines with multilateral agencies, but still maintains term deposits as its main source of funding, with competitive costs and terms. The bank kept a comfortable liquidity position in the first quarter of 2017. RATING SENSITIVITIES BIB's VR and its IDRs are constrained by Brazil's operating environment; as a result, an upgrade of these ratings is very unlikely in the near future. The Outlook of the Long-Term IDRs could be revised to Stable when/if Fitch makes a similar revision to its Outlook for the banking system's operating environment, which in turn is highly influenced by the sovereign rating outlook, currently Negative. Ratings may be negatively affected by a deterioration in the quality of the bank's assets (i.e. NPLs more than 90 days above 5.0%) and consequent decline in its performance (operating ROAA below 1.0%). Fitch has affirmed the following ratings: --Long-term Foreign and Local Currency IDRs at 'BB'; Negative Outlook; --Short-term Foreign and Local Currency IDR at 'B'; --Viability Rating at 'bb'; --Support Rating at '5'; --Support Rating Floor at 'NF'; --National Long-Term Rating at 'AA-(bra)'; Stable Outlook; --National Short-Term Rating at 'F1+ (bra)'. Contact: Primary Analyst Jean Lopes Director +55 - 21 - 4503-2617 Fitch Ratings Brasil Ltda. Praca XV de Novembro, 20 - Sala 401 B Centro - Rio de Janeiro - RJ - CEP: 20010-010 Secondary Analyst Claudio Gallina Senior Director +55-11-4504-2216 Committee Chairperson Alejandro Garcia Executive Director +1-212-908-9137 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here National Scale Ratings Criteria (pub. 07 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation 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. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT 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. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. 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. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below