Fitch Ratings has affirmed Banco de Costa Rica's (BCR) Issuer Default
Ratings (IDRs) at 'BB+' and Viability Rating (VR) at 'bb+'. A complete
list of the rating actions is provided at the end of this press release.
BCR's IDRs are driven by the explicit sovereign guarantees for all its
liabilities. As stated in the Banking Law (Ley Organica del Sistema
Bancario Nacional), all public banks have the guarantee and full
collaboration of the state, which allows the bank's IDRs to be aligned
with Costa Rica's sovereign ratings. In turn, BCR's VR considers the
bank's established track record of self-sustained profitability, strong
franchise, good asset quality, as well as the bank's challenged
The long-term rating's Outlook remains Stable. Changes in the bank's
IDRs are contingent on sovereign rating actions for Costa Rica. Given
BCR's current financial profile, the potential for an upgrade of the
bank's VR over the medium term is limited. Though not Fitch's base case
scenario, a material deterioration in efficiency or asset quality that
compromise the bank's profitability or capital position could trigger a
downgrade in BCR's VR.
Similar to other state-owned institutions, BCR's operating expenses are
high and present limited flexibility, given the bank's extensive branch
network and high personnel expenses. The current administration has
included efficiency among its key strategic objectives, although
material advances in this regard could only be expected over the medium
to long term. However, profits have been able to sustain asset growth
and maintain adequate capital ratios. In addition, in the event of an
increase in expenses or compulsory contributions, Fitch would expect
asset growth to slow down or capital ratios to decrease slightly.
BCR's growth toward a more balanced portfolio has improved loan
diversification while keeping asset quality ratios under control. After
the impact of the financial crisis on credit quality, delinquency ratios
have been controlled and the bank's reserves coverage has recovered,
though it is still bellow pre-crisis levels. Fitch expects BCR's
non-performing loans ratios to remain stable, given the bank's increased
participation in retail segments.
BCR has a very strong local franchise. The customer's perception of the
sovereign guarantee, combined with BCR's extensive branch network and
solid deposit base, place it as one of the strongest competitors in the
Costa Rican banking system. BCR is the second largest bank, with a
market share of 28.8% of total assets. BCR has grown toward a universal
bank by increasing its participation in consumer financing along with
its traditional corporate orientation. The bank complements its services
with five subsidiaries: four wholly owned subsidiaries in regulated
non-credit activities in Costa Rica and a 51% participation in the
Panamanian general licensed bank Banco Internacional de Costa Rica
(BICSA; rated 'BB+' with Stable Outlook by Fitch).
Fitch has affirmed BCR's ratings as follows:
--Long-term IDR at 'BB+'; Outlook Stable;
--Short-term IDR at 'B';
--Long-term local currency IDR at 'BB+'; Outlook Stable;
--Short-term local currency IDR at 'B';
--Viability Rating at 'bb+';
--Support Rating at '3';
--Support Rating Floor at 'BB+'.
--Long-term national rating at 'AA+(cri)'; Outlook Stable;
--Short-term national rating at 'F1+(cri)';
--Long-term senior unsecured bonds at 'AA+(cri)';
--Commercial paper at 'F1+(cri)'.
Fitch has assigned the following new ratings:
--Programa De Emisiones De Bonos Estandarizados Del Banco De Costa Rica
2012: long-term senior unsecured debt programo for USD150 million at
--Programa De Emisiones De Papel Comercial Del Banco De Costa Rica 2012:
Commercial paper issuance program for CRC15.000 million at 'F1+(cri)'.
Additional information is available on 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);
--'National Rating Criteria' (Jan. 19, 2011).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
National Ratings Criteria
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF