(The following statement was released by the rating agency)
MONTERREY, March 10 (Fitch) Fitch Ratings has affirmed the
Long-Term foreign and
local currency Issuer Default Ratings (IDRs) of Financiera
de C.V. (Findep) at 'BB-', and the Short-Term IDRs at 'B'.
ratings have also been affirmed. The Outlook is Stable. A full
list of rating
actions can be found at this end of this rating action
KEY RATING DRIVERS
The affirmation of Findep's ratings is driven by its sound
business franchise in
the consumer finance sector, and its adequate funding and
The ratings also reflect strategic actions on underwriting and
processes implemented for unsecured personal lending, later
extended to group
lending, which resulted in some improvements on Findep's
profitability and capitalization.
The ratings continue to be constrained by Findep's tight capital
ratios, with a
tangible equity to tangible assets ratio of 13.8% at YE13.
Findep has not yet
compensated the goodwill generated from the acquisitions of
Familiar S.A. (AEF) and Finsol S.A.
In Fitch's opinion, executed strategic changes have enhanced
Findep's ability to
continue strengthening its financial performance in the
However, Fitch does not anticipate a return on assets (ROA) to
in the near term (over 10%). Still, broad volumes, ample margins
operational policies, together with AEF, AFI (Apoyo Financiero)
Brazil's good performance and projected growth, could underpin
although increased competition could continue constraining the
speed of the
recovery. Capital ratios may only recover gradually and converge
over the next two years.
Findep's ratings could be downgraded if: the recently recovered
weakened to below 2%; the loan charge-off ratio had an
unexpected increase above
20%; and/or the tangible equity to tangible assets ratio fell
below 12%. A
downgrade could also arise from negative changes on its funding
Findep's ratings could only benefit from a substantial
enhancement of its
tangible capital ratios and from a quicker than expected
improvement on its
Findep is recognized as one of the leaders in the unsecured
sector. It has expanded its geographical and group lending niche
through the acquisitions of AEF, AFI, and Finsol in Mexico and
Findep's ability to maintain and gradually increase its bank
in a reasonable wholesale funding mix. Its well-balanced funding
made up of bank credit lines, and global and local market debt.
are good for 2014, and are sustained by its loan portfolio's
Nevertheless, the amount of global debt maturing in 2015 could
entity's capacity to roll it over.
The strategic measures undertaken since late 2012, boosted by
margins and broad volumes, rapidly reversed 2012's net losses.
levels are sustainable in the medium term, while the entity
should be able to
continue strengthening its overall financial performance.
The enhanced underwriting and collection processes reduced
charges-off to 24% of the total portfolio as of December 2013
(36% YE12). While
strategic actions have somewhat reduced delinquency indicators,
remain high compared to its peers. The entity expects to further
improve on the
asset quality indicators, and to maintain 100% loan loss reserve
While competition eased somewhat in 2013, the micro lending
industry in Mexico
continues to be pressured by low entrance barriers and less
that increase the indebtedness of Findep's customer-base. The
entity has taken
solid steps to adapt its business model to a more competitive
The rating actions are as follows:
Long-Term foreign and local currency IDRs affirmed at 'BB-';
Short-Term foreign and local currency IDRs affirmed at 'B';
USD200m senior unsecured notes affirmed at 'BB-';
National-scale Long-Term rating affirmed at 'A-(mex)'; Outlook
National-scale Short-Term rating affirmed at 'F2(mex)'.
Fitch has withdrawn the following rating:
National-scale Long-Term rating for local issues of senior
(Findep 11), prepaid by Findep on February 27, 2014.
+52 81 8399 9169
Fitch Mexico SA de CV
Prol. Alfonso Reyes 2612, Edificio Connexity Piso 8
Col. Del Paseo Residencial
64920 Monterrey, N.L., Mexico
Gilda de la Garza
+52 81 8399 9160
Rating Committee Chair
+1 212 908 0739
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Jan 31,
-- 'Finance and Leasing Companies Criteria' (Dec. 11, 2012);
-- 'National Scale Ratings Criteria' (Oct. 30, 2013).
Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
Finance and Leasing Companies Criteria
National Scale Ratings Criteria
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