Fitch Affirms Banco Davivienda Salvadoreno's IDR at 'BB+'

Tue Apr 23, 2013 11:01pm EDT

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(The following statement was released by the rating agency) NEW YORK/SAN SALVADOR, April 23 (Fitch) Fitch Ratings has today affirmed Banco Davivienda Salvadoreno's (Davivienda Sal) Long-Term Issuer Default Rating at 'BB+'. The rating outlook is Stable. Fitch has also affirmed Davivienda Sal's and Inversiones Financieras Davivienda's National Ratings. A full list of rating actions is at the end of this press release. KEY RATING DRIVERS - IDRs, NATIONAL RATINGS AND SENIOR DEBT The IDRs, National and senior debt ratings reflect the potential support it would receive from its shareholder, the Colombian Banco Davivienda, S.A. (Davivienda, BBB-/Stable), should it be required. Fitch views Inversiones Financieras Davivienda and Davivienda Sal as strategically important for its Colombian shareholder, according to Fitch's criteria 'Rating FI Subsidiaries and Holding Companies'. Such classification is based on Fitch's view on the role of the Salvadoran subsidiaries to foster the expansion and diversification of Davivienda in Central America, under a shared franchise and commercial name. The classification of the Salvadoran subsidiaries as strategically important also reflects Fitch's expectation that these operations will provide a recurring and meaningful share of the consolidated revenues over the medium term. However, their current contribution is still limited. In Fitch's opinion, the achieved degree of integration should increase as the new shareholder enhances its influence over the Central American operations. KEY RATING DRIVERS - VR The bank's Viability Rating (VR) reflects its domestic franchise and relevant market share, while also factoring in strong capital position and liquidity. Weaknesses include asset quality, sluggish credit growth and reserves coverage below peers' average. RATING SENSITIVITIES - IDRs, NATIONAL RATINGS AND SENIOR DEBT The Stable Outlook reflects Fitch's expectation of no substantial changes in Davivienda Sal's key rating drivers. However, the IDRs, National and senior debt ratings are sensitive to a change in Fitch's opinion on the parent's capacity and/or propensity to support its subsidiaries. They could be upgraded if Daviviendas's IDRs are upgraded. RATING SENSITIVITIES - VR The bank's VR is sensitive to a change in Davivienda Sal's capital position, franchise and competitive position. The VR could be pressured downward by material deterioration in capital ratios (Fitch Core Capital <14%) and/or its franchise and competitive position. In turn, the bank's VR has limited upside potential; nevertheless, significant improvements on profitability, that reflect a greater control of operating costs and asset quality, could potentially result in an upgrade. Fitch affirmed Davivienda Sal's rating as follows: -Long-Term IDR at 'BB+', Rating Outlook Stable; -Short-Term IDR at 'B'; -Viability Rating at 'bb'; -Support at 3. National Ratings -Long-Term at 'AA+(slv)', Rating Outlook Stable; -Short-Term at 'F1+(slv)'; -Long-Term Senior Secured Debt at 'AAA(slv)'; -Long-Term Senior Unsecured Debt at 'AA+(slv)'; -Short-Term Senior Secured Debt at 'F1+(slv)'; -Short-Term Senior Unsecured Debt at 'F1+(slv)'. Fitch affirmed Inversiones Financieras Davivienda's National Ratings as follows: --Long-Term at 'AA+(slv)', Rating Outlook Stable; --Short-Term at 'F1+(slv)'. Contact: Primary Analyst Diego Alcazar + (1 212) 908-0396 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Secondary Analyst Marcela Galicia Director +503 25166616 Edificio Plaza Cristal, Tercer Nivel. 79 Ave. Sur y Calle Cuscatlan, Col. Escalon. San Salvador, El Salvador. Committee Chairperson Franklin Santarelli Managing Director +1 212-908-0739 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, "Global Financial Institutions Rating Criteria" dated 15 August 2012 and "Rating FI Subsidiaries and Holding Companies" dated 10 August 2012, are available at www.fitchratings.com. Applicable Criteria and Related Research Global Financial Institutions Rating Criteria here Rating FI Subsidiaries and Holding Companies here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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