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January 2, 2008 |
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BANCO SANTANDER RIO: Fitch Affirms D Individual Rating Fitch Ratings has affirmed Banco Santander Rio's Individual and Support Ratings at 'D' and '5', respectively. Santander Rio's long and short-term national ratings of 'AA(arg)' and 'A1+(arg)' were affirmed on Dec. 14, 2007. The rating outlook is stable. The ratings of Santander Rio reflect its good franchise in Argentina, its improved profitability and its sound asset quality. Also, they take into account ownership by Spain's Banco Santander (Santander, rated 'AA'), as well as the fact that the operating environment in Argentina has improved considerably but remains potentially volatile. Santander Rio's profitability has significantly improved, based on strong revenue generation and excellent cost-efficiency ratios. Fitch Ratings expects its operating revenues to continue growing, in line with larger business volumes, and its profitability to remain sound, although in Q307 it fell somewhat due to lower results from its securities portfolio. Lending to the private sector has grown steadily and accounted for 56.2% of assets at end-Q307. As with most of its peers, Santander Rio's asset quality has significantly improved since 2002. Non-performing loans were only 0.63% of the total at end- September 2007, at historically low levels. Loan loss reserve coverage was sound, at 241.9%. As with most of its peers, Santander Rio's loan growth has been very rapid, and is expected to continue apace, raising the challenge of maintaining asset quality as the portfolio seasons. Santander Rio has significantly reduced its public sector exposure. This represented 12.5% of assets at end-Q307 and was entirely marked to market. This exposure is still considerable and represented 160% of the bank's equity, but should continue falling as growth from the private sector continues. Santander Rio's liquidity remains adequate and its funding was comprised primarily of deposits, which grew by 19% at end- September 2007, year-on-year. Santander Rio's capital base is adequate and has been supported by the capitalization of subordinated debt with Santander and its improving profitability. Its equity/assets ratio was 7.7% at end-Q307. Santander Rio is 99.30% owned by Santander. It is a universal bank, offering a wide range of financial services through its 223 branches. It was Argentina's fourth-largest bank by deposits at end-September 2007. Fitch's National Ratings provide a relative measure of creditworthiness for rated entities in countries where the sovereign's foreign and local currency ratings are below 'AAA'. National ratings are not internationally comparable since the best relative risk within a country is rated 'AAA' and other credits are rated only relative to this risk. They are signified by the addition of an identifier, for the country concerned, such as 'AAA (arg)' for national ratings in Argentina. |
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