TEXT-S&P affirms Citibank NA (Uruguay Branch) 'BBB-/A-3' ratings

Fri Nov 30, 2012 10:50am EST

Overview
     -- The ratings on Citibank Uruguay incorporate the parent's full and 
timely support, but are constrained by the sovereign rating on Uruguay.
     -- We are affirming our 'BBB-/A-3' global scale ratings on the bank. 
     -- The stable outlook reflects the outlook on the sovereign credit 
ratings on Uruguay.
     -- We expect Citibank Uruguay to increase its credit portfolio, 
benefiting from Uruguay's sound economic growth prospects, while maintaining 
good credit fundamentals.


Rating Action
On Nov. 30, 2012, Standard & Poor's Ratings Services affirmed its 'BBB-/A-3' 
global scale counterparty credit ratings on Citibank N.A. (Uruguay Branch). 
The outlook is stable. 

Rationale
The ratings on Citibank Uruguay reflect sovereign risk and the fact that the 
bank is a branch of New York-based Citibank N.A. (A/Negative/A-1). Standard & 
Poor's assumes that absent the sovereign's direct intervention, the parent 
would ensure full and timely payment of the Uruguayan branch's financial 
obligations.
 
The sovereign credit ratings on Uruguay (Oriental Republic of) 
(BBB-/Stable/A-3) constrain the ratings on Citibank Uruguay. The national 
scale ratings on the bank exclude sovereign intervention risk and indicate its 
position relative to other financial institutions. 

As of Sept. 30, 2012, the bank's total assets were Uruguayan peso (UYP) 29.7 
billion ($1.42 billion). Citibank Uruguay is the fifth-largest bank among the 
11 private banks operating in Uruguay, with a market share of 8.4%. Compared 
with Citibank's operations in other countries, its Uruguayan operation is 
relatively small and focuses mainly on the wholesale business, especially on 
large multinational corporations. Additionally, Citibank Uruguay works 
actively with the country's public sector. 

Citibank Uruguay follows the same policies and procedures as Citigroup 
worldwide, focusing on risk management, credit, and treasury. As part of 
Citigroup's world network, the bank benefits from high financial flexibility 
and constant support in terms of business and product development.

Citibank Uruguay, in our opinion, has very good credit quality, as seen in its 
very low nonperforming loans (NPLs). The bank enjoys a healthy asset quality 
partly as a result of the good performance of the Uruguayan economy and its 
relatively large corporate loan portfolio--the bank posted NPLs of only 0.26% 
of total loans as of Sept. 30, 2012, which compares favorably with the banking 
system. Also, its loan loss reserves were 8.8x of NPLs as of Sept. 30, 2012. 
Given its historic low level of NPLs and as the bank increases its 
intermediation level, we expect higher NPL ratios. However, we continue to 
expect Citibank Uruguay to manage its loan portfolio growth through 
conservative and prudent underwriting standards. We believe NPLs will remain 
below 1% for the next 18 months.

We expect Citibank Uruguay's profitability to remain adequate. Results for the 
nine months ended Sept. 30, 2012 showed a return on adjusted assets of 1.0%, 
which compared favorably with 0.8% for the same period of 2011. A higher 
financial margin and lower noninterest expenses helped the results. We believe 
that the bank's profitability will continue to improve as interest rates 
increase and credit activity continues to rise in Uruguay. 

In our opinion, the bank's capitalization level is adequate, given its 
condition as branch of Citibank New York. Citibank Uruguay has also an 
adequate liquidity with cash, money-market instruments, and liquid market 
securities representing about 31% of total assets and 70% of the deposits 
maturing within a month as of Sept. 30, 2012. We expect the bank to maintain 
liquidity at current levels. 

Outlook

The stable outlook reflects the outlook on the sovereign credit ratings on the 
Oriental Republic of Uruguay.


Related Criteria And Research
     -- S&PCorrect: BICRA On Uruguay Revised To Group '7' From '8', May 30, 
2012
     -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
     -- Banking Industry Country Risk Assessment Methodology And Assumptions, 
Nov. 9, 2011
     -- Group Rating Methodology And Assumptions, Nov. 9, 2011
     -- Banks: Bank Capital Methodology And Assumptions, Nov. 9, 2011
     -- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011

Ratings List

Ratings Affirmed

Citibank N.A. (Uruguay Branch)
 Counterparty Credit Rating            BBB-/Stable/A-3


Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.
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