RPT-Fitch reviews Panamanian mid-sized banks' ratings

 (Repeats to additional subscribers)  (The following statement was released by the rating agency)  SAN SALVADOR, October 31 (Fitch) Fitch Ratings has completed a peer review of  the following seven Panamanian mid-sized banks: Banco Aliado, S.A. (Aliado),  Banco Panameno de la Vivienda, S.A. y Subsidiarias (Banvivienda), Banesco, S.A.  (Banesco), Credicorp Bank, S.A. (Credicorp), Global Bank Corporation (Global),  Towerbank International, Inc. (Towerbank) and Multibank, Inc. (Multibank).  The banks included in this review have assets ranging from $800 million to  $4,000 million with operations mainly in Panama. The ratings for this group of  banks are based on their intrinsic strength rather than external support. The  banks reviewed are owned by domestic investors, excluding Banesco. A full list  of rating actions is provided at the end of this release.  RATING ACTIONS  Fitch has affirmed the ratings of Aliado, Banvivienda, Banesco, Global,  Multibank and Towerbank after assessing their credit profiles and concluding  that their relativities with peers remain unchanged.  At the same time, Fitch upgraded Credicorp's long-term national rating as a  result of its strengthened risk profile relative to its peers. Credicorp's  consistent improvement in capital ratios in recent years, along with its ability to sustain a loan loss reserve coverage coherent with its risk profile, has  strengthened its capacity to absorb losses. The combination of consistent,  albeit moderate, profitability and the capitalization of profits, boosted the  bank's capital ratios. Fitch expects Credicorp to continue performing  adequately, maintaining profitability levels similar to industry averages based  on outstanding credit quality and good efficiency. The agency estimates that the bank's Fitch Core Capital will remain above 14%, exceeding the banking system's  average.   KEY RATING DRIVERS  CREDICORP  Credicorp's ratings are based on the good quality of its assets, relatively high capital ratios and moderate but consistent profitability. The ratings are  constrained by its relatively small size, the correlation of its performance  with the economic cycle and the moderate levels of concentration on both sides  of the balance sheet.  ALIADO  The bank's ratings reflect its low risk appetite, consistent strategy, expertise in its target market and good liquidity mostly comprised of bank deposits. The  ratings also reflect the bank's ability to maintain its capital position and  grow at rates higher than the system average given its conservative dividend  pay-out policy. The ratings also take into account the modest but consistent  returns, low revenue diversification and relatively high loan and deposits  concentrations.  BANVIVIENDA  Banvivienda's current ratings are based on the effective execution of its  strategy, adequate capital ratios, steady growth of operating profit and  improved credit risk management. The ratings also take into account the  structural tenure mismatch, high concentrations in main depositors and low  efficiency, which continues limiting profitability.  BANESCO  Banesco's ratings reflect the bank's accelerated growth in previous years  coupled with their customer's adequate payment behaviour. The ratings also  factors in the bank's sustained profitability, exceeding the system's average  and its moderate capitalization. Also, the ratings convey the bank's links with  its related company, Banesco Banco Universal, based in Venezuela.   Leveraged by the Venezuelan bank's franchise, Banesco has access to customer  deposits of that country, which are fundamental to the business development and  define the risk profile of the Panamanian entity. These low-cost deposits have  helped sustain profitability and have financed the loan portfolio's rapid growth within Panama. However, their short term nature poses a higher maturity mismatch for the bank relative to its peers, which is closely monitored by the bank.  GLOBAL  Global's ratings consistent strategy, improving capitalization ratios, sound  positioning within its core market and consistently good asset quality  indicators support its ratings. Also, the bank's limited revenue diversification and moderate loan portfolio concentration by size was taken into account. Global has a more diversified funding than the peers included in this review,  nevertheless, its franchise is still smaller than that of largest Panamanian  banks.  MULTIBANK  Multibank's national ratings, Issuer Default Ratings (IDR) and Viability Ratings (VR) are based on its clear strategy, consistent performance, good asset quality and adequate capital and reserves. The ratings also factors in the improved  funding mix and adequate liquidity, as well as the challenges faced by the bank  to improve its market position and increase profitability in a highly  competitive market.  The support rating of '5' reflects Fitch's opinion that external support for  Multibank cannot be relied upon. Thus, there is no reasonable presumption of  potential support being forthcoming, which is reflected in the bank's 'No Floor' (NF) rating.  TOWERBANK  Towerbank's ratings are based on its good and consistent credit quality, high  liquidity and progress in its loan portfolio diversification by economic sector. Concentrations in the largest debtors and depositors are still high, despite  having fallen in the past year. The bank's ratings are also limited by the tight capital ratios, resulting in a moderate loss absorption capacity, below that of  its peers.  RATING SENSITIVIES  CREDICORP  The Stable Outlook indicates that Fitch does not anticipate changes in the  bank's ratings in the foreseeable future. However, over the medium term, a  material strengthening of its franchise, competitive position, and  diversification, coupled with a sustained or improved financial profile, could  gradually affect its ratings positively.  Further increases in the concentration of the portfolio's largest debtors and/or related borrowers, could pressure the ratings downward, as they would increase  the bank's balance sheet sensitivity to changes in the economic environment.  Moreover, a setback in the positive trend reflected by the capital position or  lower loan loss reserve coverage could also be negative for the ratings as it  weakens the bank's capacity to absorb losses.  ALIADO  Further diversification and expansion of the bank's business volume that leads  to a material reduction in lending and deposit concentrations as well as to a  more diversified revenue structure, could improve the bank's ratings.   Given the bank's limited scope to absorb losses, deterioration in the credit  quality of main debtors could compromise profitability and/or capital position  and consequently negatively affect current ratings.  BANVIVIENDA  Improvements in Banvivienda's ratings would come from the sustained  strengthening in operating profit resulting in sufficient internally generated  capital to support asset growth. In addition, further progress in the  diversification and quality of the loan portfolio, accompanied by sustained  improvements in maturity mismatch would have a positive effect on the ratings.  Although it is not Fitch's base case scenario, negative changes in the bank's  ratings would result from a sharp deterioration in asset quality that weaken  profitability and drive a reduction in the Fitch Core Capital ratio below 10%.  BANESCO  Further maturity achieved by the bank's portfolio that  consolidates the  customer's good payment behavior to date, would improve the ratings. Also, the  ratings would benefit from a reduction in the asset and liability gap, a greater proportion of local deposits as well as extension of the liabilities average  tenor.  The bank's ratings would be pressured by the deterioration in the portfolio's  quality leading to a weakening of the Fitch Core Capital ratio below 10%, as  well as significant increases in the volatility of deposits.  GLOBAL  Improved ratings depend on the continued strengthening of the bank's capital,  driven by internal capital generation sufficient to sustain the expected growth  in assets. The ratings would also be benefited from improvements in revenue  diversification, as well as an increase in the net interest margin, resulting in a greater ability to absorb losses in a stress scenario.   F  Global's ratings would be downgraded given a severe deterioration in asset  quality or a decline in its financial performance, resulting in a Fitch Core  Capital ratio below its recent average.  MULTIBANK  Consistent progress in the bank's capital, driven by sufficient internal capital generation to support the expected growth of assets would lead to an improvement in the bank's ratings. Additionally, the ratings could improve in the medium  term if the bank continues to increase its market share and diversify its  revenues while maintaining low concentrations on both sides of the balance sheet and good asset quality.  Multibank's ratings could be negatively affected by unexpected deterioration in  asset quality that weaken profitability and erode capital and reserves cushion.  Additionally, that overstretches the bank's capital (i.e., Fitch Core Capital  below 9%) could also be negative. Furthermore, an extension of the average tenor of its loans without a corresponding extension of its liability maturity profile would be a rating negative.  TOWERBANK  Improvements in Towerbank's ratings would come from a sustained reduction in the concentration on the largest debtors and depositors (top 20 borrowers and  depositors below 20%). Also, a stronger Fitch Core Capital ratio (above 12%),  could improve the ratings.   On the other hand, the ratings would be downgraded given a significant  deterioration in asset quality, decline in profitability, and/or distribution of dividends amid aggressive expansion involving a decrease in Fitch Core Capital  below 8%. Additionally, impairments in the liquidity position and increases in  maturity mismatches could pressure the ratings downward.  Fitch upgraded Credicorp's long-term national rating and affirmed its short-term national rating as follows:    Credicorp   --National long-term rating upgraded to 'A+(pan)' from 'A(pan); Outlook Stable;  --National short-term rating affirmed at 'F1(pan)'.  Fitch has affirmed the ratings for Aliado, Banvivienda, Banesco, Global,  Towerbank and Multibank as follows:  Aliado  --National long-term rating affirmed at 'A(pan)'; Outlook Stable;  --National short-term rating affirmed at 'F1(pan)'.  Banvivienda:  --National long-term rating affirmed at 'BBB+(pan)'; Outlook Stable;  --National short-term rating affirmed at 'F2(pan)'.  Banesco:  --National long-term rating affirmed at 'BBB-(pan)'; Outlook Stable;  --National short-term rating affirmed at 'F3(pan)'.  Global:  --National long-term rating affirmed at 'AA-(pan)'; Outlook Stable;  --National short-term rating affirmed at 'F1+(pan)'.  Towerbank:  --National long-term rating affirmed at 'A(pan)'; Outlook Stable;  --National short-term rating affirmed at 'F1(pan)'.  Multibank:  National Ratings  --National long-term rating affirmed at 'AA-(pan)'; Outlook Stable;  --National short-term rating affirmed at 'F1+(pan)'.  International Ratings  --Long-term IDR affirmed at 'BB+'; Outlook Stable;  --Short-term IDR affirmed at 'B'.  --VR affirmed at 'bb+';  --Support Rating affirmed at '5';  --Support Rating floor affirmed at 'NF';  Contact:   Primary Analyst (Aliado)  Mario Hernandez  Associated Director  +503 2516-6614  Fitch Centroamerica, S.A.  Edificio Plaza Cristal, Tercer Nivel, San Salvador  Primary Analyst (Banvivienda)  Alvaro Castro  Associated Director  +503 2516-6615  Fitch Centroamerica, S.A.  Edificio Plaza Cristal, Tercer Nivel, San Salvador  Primary Analyst (Banesco y Global)  Rolando Martinez  Director  +503 2516-6619  Fitch Centroamerica, S.A.  Edificio Plaza Cristal, Tercer Nivel, San Salvador  Primary Analyst (Credicorp)  Marcela Galicia  Director  +503 2516-6616  Fitch Centroamerica, S.A.  Edificio Plaza Cristal, Tercer Nivel, San Salvador  Primary Analyst (Towerbank)  Carmen Matamoros  Associated Director  +503 2516-6612  Fitch Centroamerica, S.A.  Edificio Plaza Cristal, Tercer Nivel, San Salvador  Primary Analyst (Multibank)  Diego Alcazar  Director  +1-212-908-0396  Fitch Ratings, Inc.  One State Street Plaza  New York, NY 10004  Secondary Analyst  Rene Medrano  Senior Director  +503 2516-6610  Secondary Analyst  Theresa Paiz-Fredel  Director Senior  +1-212-908-0534  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 and Related Research:   --'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);  --'Assessing and Rating Bank Subordinated and Hybrid Securities' (Dec. 5, 2012);  --'National Scale Ratings Criteria' (Oct. 30, 2013);  --'Evaluating Corporate Governance' (Dec. 12, 2012).  Applicable Criteria and Related Research:   Global Financial Institutions Rating Criteria  
  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181
   Assessing and Rating Bank Subordinated and Hybrid Securities  
  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695542
   Evaluating Corporate Governance   
  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=694649
   National Scale Ratings Criteria  
  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720082
   Additional Disclosure   Solicitation Status   
  http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=806736
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