NEW YORK--(BUSINESS WIRE)--Fitch Ratings has today affirmed Banco de Credito del Peru's (BCP) Viability rating (VR) and Issuer Default Ratings (IDR) at 'bbb+' and 'BBB+' respectively. See the full list of rating actions at the end of this release.
KEY RATING DRIVERS
BCP's VR and IDR reflect its dominant franchise, diversified balance sheet and revenues, consistent, strong performance, robust asset quality, ample capital and reserves cushion, ample deposit and funding base, as well as its positive economic and regulatory environment and adequate liquidity. Fitch's view of BCP's creditworthiness is tempered by its moderate efficiency and heightened competition.
The Support rating and Support Floor rating reflect the high probability of support from the government given BCP's outsized market share and systemic importance. Peru's ability to provide such support is reflected in its sovereign rating ('BBB'/'BBB+', Outlook Stable).
BCP has long been the largest bank in Peru and boasts a dominant franchise with leading market shares in almost all segments. A truly universal bank, BCP has the largest branch network throughout the country, a wide array of banking products and the country's largest customer base.
Little concentration on both sides of the balance sheet, a strong presence in all segments and a growing product offering allows the bank to minimize risks and diversify its revenue streams. This should be further deepened by its expansion into new businesses, segments and markets.
BCP shows a strong and consistent performance based on a good earnings generation capacity coupled with adequate cost control and adroit risk management that minimizes loan loss provisions pressure. Profitability is strong and reflects the bank's positive environment, sound positioning and focused management.
BCP achieved and sustained a robust asset quality thanks to its well-diversified portfolio, sound risk management and proactive remedial action. In addition, the positive economic background and continuous growth, contribute to BCP's strong 30-day Past Due Loans (PDL) ratios which stood at 1.78% at YE 2012.
BCP's core capital compares very well with that of its peers and has grown consistently thanks to earnings retention. In addition, capital should be viewed in the light of its ample reserve coverage, sound profitability and robust asset quality.
BCP's franchise and strong perception as a safe haven have allowed the bank to build, maintain and grow a wide and low-cost deposit base. This is one of the bank's key strengths as it provides stability to its balance sheet and underpins its margins.
Peru's economy shows strong growth momentum based on sound macro fundamentals. In addition, a proactive regulator, eager to take the lead and apply pre-emptive remedies, has created a strong regulatory environment.
BCP has a quite liquid balance sheet and robust asset and liability management processes. In addition, the bank has ample access to local and international capital markets which it taps regularly to fund growth and manage its liabilities.
Given its sizeable network and relatively low-risk (i.e. moderate margin) loan portfolio, BCP is not the most efficient among its peers. Sound growth weighs on operating expenses but should, over time, contribute to improve efficiency by deepening its customer penetration and improving cross-selling.
RATING SENSITIVITIES
BCP's VR and IDRs are highly correlated with the strength of the Peruvian economy; should the economic environment continue to improve, as is reflected in its sovereign ratings, and the bank maintain a consistent performance and its structural strengths, BCP's ratings could be upgraded.
Though not Fitch's base case, BCP's VR and IDRs could suffer if operating environment deterioration materially affects the bank's asset quality and performance, and leads to an erosion of the bank's reserve and capital cushions.
The Support Rating floor would move in line with Peru's Sovereign ratings, which are currently deemed stable by Fitch. For further information on Peru's sovereign ratings sensitivities, please go to fitchratings.com.
Fitch affirms BCP's ratings as follows:
--Long-term foreign currency IDR at 'BBB+', Stable Outlook;
--Short-term foreign currency IDR at 'F2';
--Long-term local currency IDR at 'BBB+', Stable Outlook;
--Short-term local currency IDR at 'F2';
--Viability rating at 'bbb+';
--Support rating '2';
--Support floor at 'BBB-';
--Senior unsecured debt at 'BBB+';
--Subordinated debt at 'BBB';
--Junior subordinated debt at 'BB-'.
In addition, the following rating for BCP Emisiones Latam 1 S.A. is affirmed:
--Senior unsecured notes at 'AA(cl)'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);
--'Assessing and Rating Bank Subordinated and Hybrid Securities' (Dec. 5, 2012).
Applicable Criteria and Related Research
Assessing and Rating Bank Subordinated and Hybrid Securities
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695542
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=789224
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