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MiBanco S&P.docx - X-S&PGR Affirms'BBB/A-2 Ratings On...

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X-S&PGR Affirms 'BBB/A-2' Ratings On MiBanco, Otlk Still Stable 2017-09-06 21:18:37.529 GMT -- MiBanco has remained the leading bank in Peru's microfinance lending sector, while the bank's asset quality and operational performance have continued to improve despite still-soft economic conditions. -- We're affirming our 'BBB/A-2' issuer credit ratings on MiBanco. -- Our stable outlook reflects that of its parent bank, Banco de Credito del Peru, and our view that the bank will remain the Banco de Credito del Peru's core subsidiary in developing its microfinance business arm. SAO PAULO (S&P Global Ratings) Sept. 6, 2017--S&P Global Ratings affirmed its 'BBB/A-2'issuer credit ratings on MiBanco, Banco de La Microempresa S.A. The outlook remains stable. The issuer credit rating on MiBanco reflects its status as a core subsidiary of Banco de Credito del Peru (BCP; BBB/Stable/A-2) given that the former operates in lines of business integral to the overall group's growth strategy in the microfinance segment. MiBanco accounted for 8.6% of the group's total assets as of June 30, 2017. In addition, we believe that it's highly unlikely that MiBanco could be sold, and the senior management has shown strong commitment and support to the bank. Due to its core status, we equalize the ratings on MiBanco to those on BCP. The ratings also factor in our view of the bank's leading market position in microfinance lending, and its improving operational performance. It's shown adequate capital and earnings, stemming from strong profitability and a projected risk-adjusted capital (RAC) level between 8.0%-8.5% for the next two years. MiBanco has adjusted its business model during the last 12-18 months, and it has been able to strengthen its net interest margins (NIMs) and to improve operating efficiency, which should sustainably underpin investments and business growth for the next two years. Even though the bank has taken important steps to reduce its historically high delinquency levels and credit losses, we expect its asset quality metrics to remain weaker than the industry average because of its focus on a high risk segment amid soft economic conditions. Our ratings also reflect its funding structure, which is in line with that of the Peruvian banking system and adequate liquidity, reflecting its stable deposit base and satisfactory metrics compared to its peers. Its
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