Fitch Affirms Banco de Reservas de la Republica Dominicana L-T & S-T IDRs at 'B';...

Fitch Affirms Banco de Reservas de la Republica Dominicana L-T & S-T IDRs at 'B'; Outlook Positive

NEW YORK--(Business Wire)--
Fitch has affirmed Banco de Reservas de la Republica Dominicana,
Banco de Servicios Multiples' (BANRESERVAS) ratings as follows:

--Foreign-currency Issuer Default rating (IDR) at 'B';

--Local currency IDR at 'B';

--Short-Term Foreign Currency IDR at 'B';

--Short-Term Local Currency IDR at 'B';

--Individual Rating at 'D';

--Support Rating of at 4;

--Support Floor at B;

--National Long-Term Rating at A+(dom)

--National Short-Term Rating at F-1(dom)

The Rating Outlook is Positive.

BANRESERVAS IDRs reflect the support provided by its shareholder,
the Dominican government. In addition, the bank's individual rating is
supported by its ample market share, the stability of its deposit base
and moderate profitability ratios. However, a tight capital base, the
significant exposure to the Dominican government on BANRESERVAS'
balance sheet and below-average asset quality metrics limit the bank's
individual rating. BANRESERVAS' ratings have a Positive Rating
Outlook, similar to the outlook of the sovereign. Positive changes in
these ratings will be contingent upon changes in the sovereign's
credit worthiness and/or an improvement in its asset quality and
capitalization.

Similar to other public entities and exacerbated by a capital
injection made in the form of non-tradable government securities,
BANRESERVAS shows a significant exposure to the sovereign in terms of
loans and securities, although it is slightly decreasing. At year-end
December 2007 the exposure reached 3.0 times (x) equity, below the
5.1x at year-end 2004, but still high given the sovereign's low IDR.

Despite its recent improvement, overall asset quality metric
compares unfavorably with the market average and regional standards,
even when all the public sector exposure is classified current. As
such, the ratio of past-due loans to total loans stood at 5.9%
(including installments in arrears) at year-end 2007; if the ratio is
adjusted just to consider the private sector exposure, the impairment
ratio would be almost 8%. At the same date overall provisioning (6.4%
of total loans) seem tight.

Despite its low-cost funding base, above-average loan loss
provision charges and a highly concentrated revenue base have limited
BANRESERVAS' profitability; as such, during year 2007 the return of
average assets ratio (ROAA) reached 2%.

Several capital infusions and below-average appropriations of net
income (similar to cash dividends) have helped to improve its capital
base. Nevertheless, it' sizable holding of fixed and foreclosed assets
still hinders its capital base. At end June 2008 the equity-to-assets
ratio stood at 9.8%, while the Free capital ratio was 3.5%, still
below international best practices.

As of year-end December 2007, BANRESERVAS ranked first out of 13
commercial and multiple service banks, with 25% of total system
assets. The bank is the main government paying agent and also has
adequate participation in the consumer and corporate markets.

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Franklin Santarelli, +1-212-908-0739 (New York)
Pedro El Khaouli, +58 212 286 3232 (Caracas)
Media Relations
Jaqueline Carvalho, +55 21 4503 2623 (Rio de Janeiro RJ)
Cindy Stoller, +1-212-908-0526 (New York)

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