Fitch Ratings has affirmed
In addition, Fitch has affirmed the Banco Ripley's Short-Term IDRs at 'F3'. Fitch has also affirmed the bank's National Long- and Short-Term ratings at 'A+(cl)' and 'N1+(cl)', respectively. The Rating Outlooks on the Long-Term ratings is Stable.
Fitch has also withdrawn the bank's Shareholder Support Rating (SSR) and assigned a Government Support Rating (GSR) of 'no support' (ns). The SSR withdrawal does not impact the bank's IDR and National Ratings, as these are derived from its intrinsic credit profile reflected in its VR. Simultaneously, Fitch has assigned a 'ns' GSR, as support for
Fitch is withdrawing
Key Rating Drivers
IDRs and National Ratings Based on VR:
The bank's VR is offset by its small franchise and weaker asset quality due to its consumer lending focus. The bank's risk profile also supports its VR and considers a risk management commensurate with its business model and adequate reserve coverage of impaired loans, which provides a cushion to absorb expected losses in more volatile business segments.
Small Domestic Franchise: Fitch's assessment of
Asset Quality Commensurate to Risk Profile:
Asset quality ratios are in line with pre-pandemic trends and reserve coverage remained sound at 2.6x including voluntaries credit impairment reserves. Fitch expects credit quality to improve toward historical levels amid a more benign operating environment, with the ratios remaining in line with the assigned score.
Profitability Pressured by Higher Credit Costs:
Sufficient Capital Ratios:
The banks' internal capital policy requires the maintenance of a minimum total capital ratio of at least 200bps above the regulatory minimum, as a cushion to support potential pressure on asset quality, considering the bank's concentrated business model. During the 2024 regulatory supervision of capital adequacy, the bank did not require an additional pillar 2 requirement charge.
Conservative Asset and Liability Management:
Limited Contagion Risk: Fitch believes the bank's strong financial profile, independent management, funding and liquidity, limited direct exposure to its parent. Fitch also believes the banking industry's regulatory framework, with its strong local regulator capable of identifying and, if necessary, restricting transfers of capital and liquidity from the subsidiary to the parent, would limit contagion risk, supporting
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
VR, IDRs and National Ratings
A negative assessment regarding the creditworthiness between of the bank and its parent company.
National Ratings are also sensitive to a weakening of creditworthiness relative to other Chilean issuers.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
VR, IDRs and National Ratings
Although a potential rating upgrade is limited by its business profile, over the medium term, the National Long-Term Ratings could be upgraded if
A consolidation of a more diversified funding could also trigger an upgrade with a loans/deposit ratio consistently below 125% including a stable portion of retail funding.
National Long-Term Ratings are also sensitive to a strengthening of creditworthiness relative to other Chilean issuers.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
National Debt Ratings: Fitch rates
Government Support Rating (GSR): The 'ns' GSR reflects the bank's small franchise within the Chilean financial system (less than 1% of customer deposits at
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
National Debt Ratings: The debt ratings would generally move together with the bank's National Long-Term Ratings.
GSR: There is no downside potential for the GSR; however, upside potential is limited and can only occur over time with a material growth of the bank's systemic importance.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
National Debt Ratings: The debt ratings would generally move together with the bank's National Long-Term Ratings.
GSR: upside potential is limited and can only occur over time with a material growth of the bank's systemic importance.
VR ADJUSTMENTS
The asset quality score of 'bb+' has been assigned below the 'bbb' category implied KRD score for the following adjustment reason: impaired loan formation (negative).
The funding and liquidity score of 'bbb-' has been assigned above the 'bb' category implied KRD score for the following adjustment: reason: liquidity coverage (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.
External Appeal Committee Outcomes
In accordance with Fitch's policies the Issuer appealed and provided additional information to Fitch that resulted in a rating action for SSR that is different than the original rating committee outcome.
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, due to either 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 www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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