Fitch Ratings has affirmed
The Outlook is Stable. A full list of rating actions is below.
Key Rating Drivers
The VR factors in the bank's weak asset quality, although the headline asset-quality ratios have improved, high single-name borrower and depositor concentrations, and limited core capitalisation. Profitability metrics are moderate and liquidity is sufficient. The VR of 'b-' is below the 'b' implied VR because of its business profile.
Uncertain Operating Environment: Despite Fitch's expectations of strong GDP growth given structural reforms and gas projects coming onstream, banks face an uncertain operating environment outlook as global contagion risks intensify.
Modest Local Franchise:
Risk Controls from Group:
Weak Asset Quality:
Healthy Performance Metrics: Reported profitability metrics are generally healthy but volatile through the cycle, reflecting varying loan growth and loan-impairment charges. The bank displays a high cost base, which it is trying to reduce through digitalisation and an efficient branch network. Net interest margins are supported by high lending interest rates, high yields on government securities and an inexpensive funding base.
Weak Capitalisation:
Concentrated Funding; Reasonable Liquidity:
Shareholder Support Rating of 'b-':
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
The bank's IDR would be downgraded if both the VR and SSR are downgraded. A downgrade of the SSR would follow a downgrade of the parent. A downgrade of the VR would likely follow deterioration in asset quality such that impairment charges cause the bank to have limited headroom above the regulatory minimum capital requirements.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
The bank's IDRs would be upgraded if the VR or the SSR is upgraded. An upgrade of the SSR would require a two-notch upgrade of the parent. A VR upgrade would require a stronger business profile and a consistently low impaired loans ratio combined with an upgrade of the parent.
VR ADJUSTMENTS
The earnings & profitability score of 'b' is below the 'bb' category implied score, due to the following adjustment reason: risk-weight calculation (negative).
The capitalisation & leverage score of 'b-' is below the 'bb' category implied score, due to the following adjustment reason: leverage and risk-weight calculation (negative).
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
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