(The following statement was released by the rating agency)
RIO DE JANEIRO/NEW YORK, June 07 (Fitch) Fitch Ratings has
following ratings to Omni S.A. Credito, Financiamento e
--Foreign and local currency Long-term Issuer Default Ratings
--Foreign and local currency Short-term IDRs 'B';
--Viability Rating 'b';
--Support Rating '5';
--Support Rating Floor of 'No Floor'.
At the same time, Fitch has affirmed Omni's other ratings as
--National long-term rating at 'BBB-(bra)'; Outlook Stable;
--National short-term rating at 'F3 (bra)'.
KEY RATING DRIVERS - IDRS AND NATIONAL RATINGS
The ratings of Omni are driven by its Viability Rating (VR).
reflect the institution's good systems and risk controls, as
well as adequate
profitability ratios. It also considers Omni's experience in its
focus, financing autos (cars, trucks and utility vehicles,
especially used, up
to 25 years old, as well as new and used motorcycles) for the
power classes ('C' and 'D'), a segment less exploited by the
The ratings also consider Omni's small size compared with its
leverage, its business market, greater susceptibility to
fluctuations in the
economy, and its still limited access to long-term funding
presupposes high revenue and business concentrations, typical of
with these characteristics.
Omni continued to present operating results slightly above the
average of banks
and finance companies focused on consumers. Its delinquency
ratios have also
been high and greater than those reported in traditional banking
given the nature of consumer credit to the low-income classes.
However, its high
delinquency is well monitored and offset by the high interest
rates charged and
the diversification of its portfolio, which, according to Fitch,
is not expected
to experience excessive deterioration.
Omni's funding will continue to rely on the securitization of
receivables-backed investment funds (FIDCs), as well as time
special guarantees (DPGE I and II). Omni also has about BRL210
deposits, notes and hybrid capital) funded by its shareholder.
Omni is studying
an overseas issuance of about USD50 million. Given the lower
allows Omni to be selective with its underwriting, the finance
company plans to
maintain the size of its loan portfolio at the current level.
Due to loan portfolio retention, Fitch's calculation of core
weighted risk assets remained around 9% in 2012, a percentage
that is considered
to be low. The agency weights loans sold to FIDCs at 75%. Hybrid
debt instruments, considered in regulatory capital as Tier 2,
were not included
in this calculation, although Fitch recognizes the benefits of
long-term source of funding.
Omni has been increasing its private label credit card
operations, mainly with
small supermarket chains. Their participation in earnings,
however, is still
small, but will tend to grow over the long term.
RATING SENSITIVITIES - IDRS AND NATIONAL RATINGS
Omni's ratings could benefit from growth in the capital
funding diversification, and an improvement in its asset quality
ratios. On the
other hand, negative pressures on the rating may come from: a
operating earnings and operational ROAA falling below 1.0%;
Fitch core capital
ratio below 8%; an increase in the level of encumbered assets;
significant deterioration 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. In first
quarter 2013, Omni presented total assets of BRL1.4 billion
net worth of BRL152,6 million (USD75.8 million) and net income
of BRL6,5 million
Fitch Ratings Brasil Ltda.
Praca XV de Novembro, 20 - 401 B,
Rio de Janeiro, RJ
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' (Aug. 15,
--'National Ratings Criteria' (Jan. 19, 2011).
Applicable Criteria and Related Research:
National Ratings Criteria
Global Financial Institutions Rating Criteria
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