Monday 21 June 2021

Fitch Affirms Banco de Costa Rica’s IDR at ‘BB+’

Fitch Ratings has affirmed Banco de Costa Rica’s (BCR) long-term Issuer Default Rating (IDR) at ‘BB+’ and Viability Rating (VR) at ‘bb+’. The Rating Outlook is Stable. A full list of rating actions is at the end of this rating action commentary.

logo_bcr_0The bank’s IDRs, senior debt ratings, support rating, support rating floor, and national ratings are driven by the potential support of the Costa Rican government (rated ‘BB+’, Stable Outlook), as stated in the National Banking System Law.

According to this law, all state-owned banks have the guarantee and full collaboration of the state. The explicit guarantee is reflected in BCR’s support rating of ‘3’ and allows BCR’s long-term IDR and senior debt ratings to be equalized with the sovereign rating.

- Advertisement -

he Stable Outlook reflects that Fitch does not anticipate changes in the bank’s ratings in the medium term. However, the bank’s IDRs and senior debt rating are sensitive to changes in the Costa Rica sovereign rating and to changes in the bank’s VR. An upgrade in the bank’s IDRs would reflect positive sovereign rating actions for Costa Rica.

A sustainable improvement in BCR’s stand-alone risk profile could also lead to an upgrade in the bank’s VR and thus in its IDRs – yet this is an unlikely scenario. In turn, a downgrade in the bank’s IDR would reflect a negative rating action on both Costa Rica’s sovereign rating and the bank’s standalone financial profile.

The bank’s VR balances the bank’s strong franchise and adequate capital position with its modest profitability and adequate asset quality. Customers’ perception of the sovereign guarantee, combined with BCR’s extensive branch network and ample deposit base, place the bank as one of the strongest competitors in the Costa Rican banking system.

BCR’s capital generation remains sufficient to sustain asset growth and to maintain adequate capital ratios. In Fitch’s opinion, the bank’s capital ratios are likely to remain in line with similarly rated international peers, despite the recent regulatory changes regarding risk weighted asset calculations.

- Advertisement -

As a corporate-oriented state-owned bank, BCR maintains a modest net interest margin (NIM), comparatively lower than those of its international peers. The bank’s lower margins were pressured further in 2013 by the decreasing trend in the reference interest rate and by the loan growth restriction imposed by the central bank. Fitch’s performance outlook for BCR in 2014 contemplates higher loan growth across as well as adjustments in the funding costs that will allow for a wider NIM. As a result profitability will improve but it is likely to remain modest and below international peer’s.

In Fitch’s opinion, BCR’s loan portfolio is well diversified with a moderate exposure to exchange rate risk. The bank’s past due loans-to-total loans ratio remains below the ‘bb+’ VR rating category median, although with a negative trend since 2012, and reserve coverage is low compared to the ‘bb+’ rating category median and unlikely to increase under the current regulatory guidelines.

- Advertisement -

FACT CHECK:
We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

Ricohttp://www.theqmedia.com
"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

Today’s Vehicle Restriction June 21: plates ending in 1 & 2 CANNOT circulate

Today, Monday, June 21, we are back to the two plates...

Will that be Cash or Sinpe Móvil?

QCOSTARICA - Sinpe Móvil is easy to use. From your phone,...

MOST READ

Bribed with cars, sexual favors and money in exchange for road works contracts

QCOSTARICA - The OIJ uncovered a big pothole on Monday when it was announced that public officials had allied with construction companies that, apparently,...

New trends in coffee consumption challenge sector

QCOSTARICA - Changes in consumption habits in terms of times, types of preparation and specialties challenge the coffee sector. Most of the consumers in Costa...

Informants assisted OIJ in corruption investigations, says the minister

QCOSTARICA - The investigation into alleged bribery of public officials in exchange for contracts for road works, received help from informants within the Consejo...

Diseases, weather and low prices hit the orange sector in Costa Rica

HQ - The appearance of pests and diseases, in particular the 'dragón amarillo' (yellow dragon), the impact of the weather and a sharp drop...

13 Powerful Home Remedies for Acne

Acne is considered to be one of the most common skin ailments on the planet, with a record 60 million people being afflicted by...

Internet speed decreases during peaks in service

QCOSTARICA - Ever wonder why your surfing on the Internet slows down, to even a crawl, mainly in the evenings? This is due to...

Today’s Vehicle Restriction June 17: 7 & 8 CANNOT circulate

Today, Thursday, June 17, vehicles with plates ending 7 & 8 CANNOT circulate The measure is countrywide and applied between 5:00 am and 9:00 pm,...

Despite investigation, construction of road works by H. Solís will continue

QCOSTARICA - Five major road works under the responsibility of the H. Solís company will continue in development despite investigations for alleged corruption involving...

Will that be Cash or Sinpe Móvil?

QCOSTARICA - Sinpe Móvil is easy to use. From your phone, you can send money to friends, family and pay for things. Or receive...

WANT TO STAY UP TO DATE WITH THE LATEST!

Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.