BOGOTA, Colombia--(BUSINESS WIRE)--The national ratings of Colombia's financial institutions are unaffected by the recent revision of the country's sovereign Outlook to Positive, according to Fitch Ratings. The ratings of privately owned banks in Colombia are not currently constrained by the country's sovereign rating, and therefore the recent sovereign action is neutral to those ratings.
On March 6, 2013, Fitch affirmed Colombia's Sovereign Ratings (Foreign Currency Issuer Default Rating at 'BBB-' and Local Currency Rating at 'BBB') and revised the Rating Outlook on the country's long-term IDRs to Positive from Stable. The Outlook revision reflects Colombia's increased resilience due to strengthening external accounts and favorable government debt dynamics. (For additional details, see 'Fitch Revises Colombia's Rating Outlook to Positive; Affirms 'BBB-' Foreign Currency IDR'.)
Fast credit expansion in 2010 and 2011 moderated in 2012 partly due to policy measures such as interest rate hikes and increased provisioning requirements. This reduced potential risks to macroeconomic and financial stability. Moreover, Colombian banks have posted solid profitability, asset quality and liquidity trends in the last three years. This provides additional cushions to cover the current economic slowdown, which now appears to be cyclical.
The ratings of Colombian's banks may be positively impacted in the future if such favorable conditions in the operating environment combine with sustained and robust financial results and capitalization trends.
Additional information is available at www.fitchratings.com.
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