Fitch Ratings has affirmed
The Rating Outlook on the Long-Term IDR is Stable. Fitch also affirmed Bladex's National Long-Term and Short-Term ratings at '
Key Rating Drivers
Ratings Based on Standalone Performance: Bladex's IDRs and national ratings are driven by its 'bbb' VR, reflecting Bladex's extensive geographic diversification, sound business and funding profiles, with a conservative risk appetite, leading to a resilient financial performance with outstanding asset quality, improved profitability and good capitalization. Bladex's broad jurisdictional diversification, along with its inherently strong creditworthiness, will continue to boost its VR to be above
Highly Diversified Operating Environment: Bladex has demonstrated a solid ability to effectively manage the various OEs where it has operations, redirecting its portfolio relatively quickly toward markets with more opportunities and lower risk. The entity stands out for its geographically diversified businesses with exposure in more than 25 jurisdictions. Fitch assesses Bladex's blended OE by weighting total earnings assets according to where they are allocated, resulting in a 'bbb-' score as of
Solid and Steady Business Profile: Bladex's highly recognized regional franchise has been underpinned by its robust and well-developed business model, sound corporate governance and experienced senior management team, giving it a relevant position in its market served, comparing well with regional entities.
The long track record of the bank's effective execution of its low-risk strategy, allocating its portfolio to high-quality assets in defensive countries and sectors, is reflected in a resilient financial performance, despite its inherent concentration by debtor, and allowing it to withstand difficulties in the OE. Fitch believes these factors offset the small four-year total operating income average of
Consistently Strong Loan Quality: Bladex's asset quality reflects its consistent and robust underwriting standards, along with its solid risk management framework, which Fitch expects will continue to underpin loan quality at levels similar to those recently observed in the rating horizon.
In
Sustained Enhanced Profitability: Fitch revised Bladex's profitability factor score to 'bbb-' from 'bb+' based on improvement in the bank's performance, which suggests it will remain consistent with said score in the foreseeable future. Operating profit to risk-weighted assets (RWA) ratio was 2.3% as of
Capitalization with Upward Trend: Fitch expects the common equity Tier 1 (CET1) ratio to remain around 16%, considering moderate loan growth and consistent internal capital generation, supported also by improved profitability, and despite quarterly dividend payment. As of
Notable Funding and Liquidity Profiles: Bladex's differentiated and greatly diversified financing structure continued to strengthen as of 1Q24, providing it higher flexibility to navigate the different OE's challenges. It is characterized by a short-term balance structure, very high-quality deposit base, which is complemented by ample financing options and wide access to diverse sources in international markets, also encompassing contingent resources.
As of 1Q24, the deposits accounted for 52.7% of total funding. Fitch's liquidity assessment heavily weighs the bank's high-quality liquid balance sheet and easily realizable assets, mitigating potential headwinds in the OE.
GSR: Bladex's 'ns' GSR denotes that external support, while possible, cannot be relied upon, due to Fitch's view of
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Bladex's ratings could be downgraded if the risks of the OE materially increase, resulting in a significant deterioration in loan portfolio quality and profitability that pressures the CET1 to RWA ratio to a level consistently below 13.0%;
A change in the bank's risk profile that results in an increased exposure to higher-risk countries or sectors and weakens Fitch's assessment of its OE, could trigger a downgrade of its ratings;
Given the GSR is the lowest level in the scale, there is no downside potential for this rating.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Bladex's ratings could be upgraded if its asset diversification strategy consistently sustains an improvement in the OE weighted score, which in turn maintains profitability (operating profit to RWA) consistently above 1.5% and the CET1 to RWA ratio steadily above 17%;
Material reductions in concentrations per debtor, along with a consistent improvement in the OE weighted score, also could improve Fitch's assessment of the bank's asset quality and risk profile, benefiting the VR;
Bladex's national ratings are at the highest level of the national rating scale and therefore have no upside potential;
As
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
Senior Debt -
Senior Debt -
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
The senior unsecured debt national ratings in
The senior unsecured debt National Long-Term Rating in
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
There is no upside potential of the senior unsecured debt national ratings, both in
VR ADJUSTMENTS
The Business Profile Score of 'bbb' has been assigned above the 'bb' category implied score due to the following adjustment reasons: Business Model (positive), Market Position (positive) and Strategy and Execution (positive).
The Asset Quality Score of 'bbb+' has been assigned below the 'a' category implied score due to the following adjustment reason: Concentrations (negative).
The Earnings and Profitability Score of 'bbb-' has been assigned above the 'bb' category implied score due to the following adjustment reason: Historical and Future Metrics (positive).
The Funding and Liquidity Score of 'bbb+' has been assigned above the 'b & below' category implied score due to the following adjustment reasons: Liquidity Coverage (positive) and Non-Deposit Funding (positive).
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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