SAO PAULO--(BUSINESS WIRE)--Fitch Ratings has today affirmed all of Banco Alfa de Investimento S.A.'s (Alfa) ratings, as follows:
--Long-term national rating at 'AA-(bra)', Outlook Stable;
--Short-term national rating at 'F1+(bra)';
--Support Rating at '5'.
The affirmation of the ratings reflect Alfa's consistent track record through the cycles and a conservative approach in management especially in times of crisis. This approach is reflected in its predictable returns, good credit quality and liquidity ratios and mismatch management. On the other hand, Alfa's ratings also take into account the still relevant concentrations among borrowers and investors, as well as the lower diversification of its revenue base in comparison to its competitors with higher ratings.
In light of the rating upgrade in October 2010, a further improvement in the ratings is likely to be limited given the business model of Alfa, which, by nature, has a concentrated funding base.
Alfa has presented stable results over the years, including during periods of financial turbulence. However, the bank's profitability has been lower than peers and the levels registered in the pre-crisis period. This is a reflection of the bank's focus on segments with relatively lower margins and its conservative credit policy, as well as the prioritization of liquidity over profitability. Fitch believes that this profile will not change in the short-run, despite the uncertain international economic outlook.
Alfa continued to maintain a loan portfolio of high credit quality with a conservative level of provisioning. As a result of intensified efforts, borrower concentration has been improving, although it is still high in comparison to peers, as a result of the relatively higher proportion of its corporate credit portfolio.
Fitch considers Alfa's conservative approach to liquidity and efficient mismatch management as positive. The bank has kept funding costs under control, despite the fact that a large part of its funding client base is made up of corporates, and concentrations, similar to its peers, are high.
The reduction in leverage has allowed the capitalization ratio to remain comfortable, and historically capitalization indicators have been higher than the average of those of its competitors.
Controlled by Aloysio Faria, Alfa is part of an integrated financial conglomerate whose institutions operate with a focus on financing to large and medium-sized companies, vehicle financing, payroll deductible lending, asset management and private and investment banking. The administration of the conglomerate activities is centralized and shares the same control and audit systems. The bank is Alfa Financial Conglomerate's leading institution, which represented 85% of its assets and 58% of its capital in June 2011.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);
--'National Ratings Criteria' (Jan. 19, 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
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