Reuters: Financial Services and Real Estate: TEXT-Fitch affirms Banco Internacional de Costa Rica

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TEXT-Fitch affirms Banco Internacional de Costa Rica May 29th 2012, 21:30 Tue May 29, 2012 5:30pm EDT (The following statement was released by the rating agency) May 29 - Fitch Ratings has affirmed Banco Internacional de Costa Rica's (BICSA) Issuer Default Rating (IDR) at 'BB+'. The Rating Outlook remains Stable. A complete list of rating actions is included at the end of this press release. BICSA's IDRs and national ratings reflect the support it would receive from its main shareholder, Banco de Costa Rica (BCR, rated 'BB+' with a Stable Outlook by Fitch), should it be required. In turn, its viability rating (VR) considers the bank's conservative risk management, strong asset quality, adequate capital position, and enhanced earnings capacity. However, high funding and credit concentrations - inherent to the bank's corporate orientation and relative small size in the Panamanian banking system - continue to limit the bank's individual creditworthiness. The Stable Outlook reflects Fitch's expectation of no substantial changes in BICSA's risk profile in the foreseeable future. However, changes in BCR's capacity or willingness to support BICSA would affect the bank's national ratings and IDRs. Similarly, a decline in the bank's capital position above Fitch's expectations, a decrease in profitability, or significant asset quality deterioration could trigger a VR downgrade. By contrast, a significant increase in diversification of loans and funding sources could improve the bank's VR in the long run. BICSA has maintained low delinquency ratios (below 1% over the past five years), controlled restructured loans and a low level of loans rated among the highest risk categories according to local regulations. This reflects the bank's tempered risk appetite, good credit controls and increasing geographic and economic sector diversification. Additionally, the bank maintains above-average reserve coverage of past-due loans relative to domestic and international peers (emerging market commercial banks with a VR of 'b-', 'b' and 'b+'). BICSA's profitability ratios are in line with its corporate orientation, while also reflecting the conservative risk profile of its assets. Over the past few years, financial performance has kept capital accumulation below asset growth, resulting in declining but still adequate capital ratios. BICSA's capital position could decrease as a result of asset growth, but Fitch believes it would remain at an adequate level. Influenced by its corporate nature, BICSA's main funding source of deposits is highly concentrated and could limit financial flexibility under a stress scenario. However, diversification has improved with the addition of bank loans and bond issuances. At the same time, the bank uses additional mechanisms to control concentration risk, such as maintaining higher liquidity levels. BICSA is a general licensed bank established in Panama as a subsidiary of the two largest Costa Rican state-owned banks. BICSA, founded in 1976, maintains a strong focus in corporate loans and market presence in all Central American countries through representative offices located in Costa Rica, Nicaragua, Guatemala and El Salvador, and has a branch in Miami, Florida. Fitch affirmed BICSA's ratings as follow: International ratings --Long-term IDR at 'BB+'; Outlook Stable; --Short-term IDR at 'B'; --Viability Rating at 'bb'; --Support Rating at '3'; National ratings --Long-term national rating at 'AA-(pan)'; Outlook Stable; --Short-term national rating at 'F1+(pan)'; --Long-term senior unsecured bonds at 'AA-(pan)'; --Long-term senior unsecured bonds at 'AA+(slv)'; --Commercial Paper at 'F1+(pan)'. (Caryn Trokie, New York Ratings Unit) Link this Share this Digg this Email Reprints

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