(The following statement was released by the rating agency)
NEW YORK, May 28 (Fitch) Fitch Ratings has affirmed the ratings
of Omni S.A.
Credito, Financiamento e Investimento (Omni), including the
Ratings (IDRs) at 'B'. In addition, the Viability Rating was
withdrawn. See the full list of rating actions at the end of
KEY RATING DRIVERS - IDRS AND NATIONAL RATINGS
Fitch has affirmed the ratings of Omni. The ratings are driven
institution's good systems and risk controls, as well as
ratios. They also consider Omni's experience in its main
business line -
financing autos (cars, trucks and utility vehicles, especially
used, up to
25-years old, as well as new and used motorcycles) for the lower
purchasing-power classes ('C' and 'D'), a segment less targeted
The ratings also consider Omni's small size compared with its
peers, its higher
leverage, business market, greater susceptibility to
fluctuations in the
economy, and the finance company's still limited access to
sources. This presupposes high revenue and business
concentrations, typical of
institutions with these characteristics.
Omni continued to present operating results slightly above the
average of banks
and finance companies that focus on this consumer-finance niche.
nature of consumer credit to the low-income classes, Omni's
continued to be higher than those reported in traditional
However, these higher levels have been well-managed and were
expectations and pricing parameters that Omni has for its
model. Its asset quality indicators are well-monitored and
offset by the higher
interest rates that are charged and mitigated by the size of the
large number of borrowers. Omni's funding is expected to
continue to mostly
rely on the securitization of assets for receivables-backed
(FIDCs), as well as time deposits with special guarantees
(DPGEs). Omni also
currently has about BRL210 million (time deposits, notes and
funded by its shareholder. Omni is studying future overseas
complement existing issues. Even though Omni faces a low level
their expectation for growth during 2014 is between 10% and 12%,
the company to continue to be selective with its underwriting
Profitability contributed to an improved capitalization level.
calculation of core capital-to-total weighted risk assets
remained improved from
9.9% in 2012 to 12.6% in 2013. The agency weighs loans sold to
FIDCs at 75%.
Hybrid capital and debt instruments, considered in regulatory
capital as Tier 2,
were not included in this calculation, although Fitch recognizes
the benefits of
this additional long-term source of funding.
The Viability Rating was affirmed and withdrawn to align it with
criteria applied to other non-bank financial institutions. In
given the absence of regular support available for banks, a
institution's risk of failure is no different than its default
risk captured by
the entity's long-term IDR.
RATING SENSITIVITIES - IDRS AND NATIONAL RATINGS
Omni's ratings could benefit from growth in its operational
funding diversification, and a sustained improvement in its
ratios, which include a lower level of charge-offs.
Specifically, Omni's ratings
may be upgraded if the company manages to preserve its
operational ROAA at
around 2% within the economic cycle and preserve its
capitalization levels; and
maintains adequate asset and liability management and loan loss
with its asset quality trends. On the other hand, negative
pressures on the
rating may come from: a decrease in operating earnings and
falling below 1.0% combined with a Fitch core capital ratio
below 9%; a relevant
increase in the level of encumbered assets; and/or a significant
of its asset quality ratios.
Founded in 1968 as Distribuidora de Titulos e Valores
Mobiliarios (DTVM), a
securities dealer, Omni was converted into a finance company in
1994. At Dec.
31, 2013, Omni presented total assets of nearly BRL1.8 billion
million), net worth of BRL215 million (USD91 million) and net
income of about
BRL51 million (USD22 million).
Fitch has affirmed the following ratings:
--Long-term foreign and local currency IDRs at 'B'; Outlook
--Short-term foreign and local currency IDRs at 'B';
--National Long-term rating at 'BBB-(bra)'; Outlook Stable;
--National short-term rating at 'F3(bra)';
--Viability Rating at 'b'; affirmed and withdrawn;
--Support rating at '5';
--Support rating floor at 'NF' (No Floor).
Senior notes due 2015:
--Long-term foreign currency at 'B/RR4'.
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
Luiz Claudio Vieira
Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908
Additional information is available on www.fitchratings.com.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Jan. 31,
--National Scale Ratings Criteria (Oct. 30, 2013);
--Finance and Leasing Companies Criteria (Dec. 11, 2012)
--Assessing and Rating Bank Subordinated and Hybrid Securities
--Recovery Ratings for Financial Institutions (Sept. 24. 2013)
Applicable Criteria and Related Research:
Recovery Ratings for Financial Institutions
Assessing and Rating Bank Subordinated and Hybrid Securities
Finance and Leasing Companies Criteria
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
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
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH