SAN SALVADOR, El Salvador & NEW YORK--(BUSINESS WIRE)--Fitch Ratings has revised the Rating Outlook on the Guatemalan Banco Industrial's (BI) long-term Issuer Default Rating (IDR) to Stable from Positive. A full list of BI's rating actions follow at the end of this press release.
The Outlook revision is based on Fitch's view that BI's capital ratios have not improved as expected, and may even reduce slightly in the short term. The Stable Outlook reflects that Fitch does not anticipate substantial changes in BI's risk profile in the foreseeable future. However, further than expected pressures on BI's capital ratios could trigger a downward revision of the bank's IDR. In turn, enhanced profitability ratios that boost BI's capital position could lead an upgrade of BI's IDRs.
BI's IDRs and Viability Rating (VR) are driven by its strong franchise, ample deposit base and sound liquidity. The ratings also factor BI's modest profitability, pressured capital ratios, and relatively high exposure to USD denominated loans.
BI's capital position is likely to remain pressured over the medium term. The bank's dividend pay-out ratio is expected to continue around 60% over the next three years given BI's holding (BiCapital) dependence upon dividends from its operating subsidiaries to pay out its debt. BiCapital's debt arose from the past acquisition of the Honduran Banco del Pais, which is reflected in BiCapital's moderate double leverage of 141%, as of June 2011.
BI proved its resilience during the global financial crisis, maintaining a sound asset quality. BI's loans and foreclosed assets have been relatively stable (0.8% of gross loans and foreclosed assets as of June 2011) and loan loss reserves have improved gradually (June 2011: 195.7% of impaired loans and foreclosed assets; 2007-2010: 165.7%). On the other hand, BI's borrower's concentration has remained roughly unchanged over the past three years (a moderate 22% of the total portfolio), while it presents a relatively high exposure from loans granted to non-US dollars generators.
BI's performance has returned to pre-crisis level. The bank's narrow margins are offset by its good efficiency levels and lower loan impairment charges pressures. The bank also benefits from a sizable base of recurring, stable, diversified, and low cost customer funding.
Established in 1968, BI is Guatemala's largest bank, controlling 27.5% and 26.5% of the total assets and deposits of the banking system as of June 2011. BI's primary focus is on commercial and corporate banking. BI's main shareholder is Bicapital Corp., a holding company domiciliated in Panama, with assets of US$8,114.7 millions as of June 2011. BiCapital also owns the Honduras-based Banco del Pais since 2007.
Fitch affirms ratings and revises the Outlook on Industrial as follows:
--Long-term IDR at 'BB'; Outlook revised to Stable from Positive;
--Short-term IDR at 'B';
--Local-currency long-term IDR at 'BB'; Outlook revised to Stable from Positive;
--Local-currency short-term IDR at 'B';
--Viability Rating at 'bb';
--Support at '3';
--Support Rating Floor at 'BB-';
--Individual rating at 'C/D';
--Subordinated Tier I Capital Notes debt at 'B+';
--National scale long-term rating at 'AA-(gtm)'; Outlook revised to Stable from Positive;
--National scale short-term rating at 'F1+(gtm)'.
Fitch affirms ratings on Industrial Subordinated Trust as follows:
--Industrial Subordinated Trust Tier II debt at 'BB-'.
Fitch affirms ratings and revises the Outlook on Contecnica as follows:
--National scale long-term rating at 'A(gtm)'; Outlook revised to Stable from Positive;
--National scale short-term rating at 'F1(gtm)'.
Fitch affirms ratings and revises the Outlook on Banco del Pais as follows:
--National scale long-term rating at 'A+(hnd)'; Outlook revised to Stable from Positive;
--National scale short-term rating at 'F1 (hnd)'.
Fitch affirms ratings and revises the Outlook on Banco Industrial El Salvador as follows:
--National scale long-term rating at 'A+(slv)'; Outlook revised to Stable from Positive;
--National scale short-term rating at 'F1(slv)'.
Additional information is available on '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);
--'National Ratings Criteria' (Jan. 19, 2011);
--'Central American Banks: After the Crisis, an Uneven Evolution' (Sept. 28, 2011);
--'Guatemala' (Aug. 23, 2011).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
National Ratings Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885
Central American Banks (After the Crisis, an Uneven Evolution)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651468
Guatemala
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648986
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. 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.