Fitch Affirms Banco Agricola's IDR at 'BBB-'; Outlook Remains Negative

  Fitch Affirms Banco Agricola's IDR at 'BBB-'; Outlook Remains Negative

Business Wire

NEW YORK -- April 23, 2013

Fitch Ratings has affirmed Banco Agricola's (Agricola) long-term Issuer
Default Rating (IDR) at 'BBB-' and Viability Rating (VR) at 'bbb-'. The Rating
Outlook on the IDR remains Negative. A full list of Agricola's rating actions
follow at the end of this press release.

KEY RATING DRIVERS

Agricola's IDR and VR reflect the bank's strong franchise, sound
profitability, robust capitalization, good asset quality, ample depositary
base, and improved loss-absorption capacity. The ratings also consider the
bank's proven resilience to downturns in economic cycles, the loan's
concentrations and El Salvador's challenging economic conditions, which may
still have some impact on the bank's growth prospects and asset quality.

Agricola's support rating of '3' reflects Fitch's view of the possible
expected support the bank will receive from its ultimate parent: Bancolombia
S.A. (Bancolombia, IDR 'BBB'). Agricola is considered a strategic important
subsidiary for Bancolombia, as defined by Fitch's Criteria 'Rating FI
Subsidiaries and Holding Companies'. In Fitch's view, Agricola provides a
meaningful and recurring share of revenues to its parent and is an important
subsidiary for Bancolombia's growth and diversification in Central America.
Recent expansion of Bancolombia into other Central American markets bode well
to enhance the relative importance of its international network in the medium
and long term.

Agricola has a long track record of sound overall financial performance. The
bank's ROAA and ROAE (2.4%, 17%, respectively) compared positively with the
local banking system and with some of its main international peers. The bank's
profitability was boosted by the stable and relatively low credit risk costs,
robust operating efficiency, good margins, and growth of its loan portfolio.
For the short run, the bank's ROAA may remain above 2%.

Agricola has a good asset quality. Impaired loans accounted for 2.1% of gross
loans in 2012 (2010: 3.4%), while the bank's net charge-offs returned to the
lowest level of the last five years. The bank's strong reserves (133% for +30
days overdue loans) mirror the conservative policy for impaired loans.
However, debtors' concentration is moderate, with the 20 largest exposures by
economic group accounting for 25.1% of loans.

The bank's robust capitalization (Fitch Core Capital averaged 20.5% of risk
weighted assets during 2010-2012) compared positively with its main
international peers. In Fitch's view, despite the bank's capital may decline
slightly to around 19% of risk weighted assets in 2013, Agricola's overall
loss-absorption capacity will remain sound and above the average of the local
banking system and its main international peers. Agricola's diversified
deposits base is favored by its ample network of points of services and market
share.

RATING SENSITIVITIES

Following that Agricola's IDR is constrained by El Salvador's country ceiling
('BBB-'), the Negative Outlook of the bank's IDR reflects that an eventual
downgrade of El Salvador's sovereign rating ('BB'/Negative Outlook) could
result in a downgrade of the country ceiling, which would, in turn, lead to a
downgrade of Agricola's IDRs. On the other hand, if the sovereign ratings are
eventually affirmed at 'BB' and the Outlook is revised to Stable from
Negative, it is highly likely that Agricola's IDR would also be affirmed with
a Stable Outlook, as the country ceiling should remain in its current level.

Fitch has affirmed the following ratings for Agricola:

--Long-term IDR at 'BBB-'; Outlook Negative;

--Viability rating at 'bbb-';

--Short-term IDR at 'F3';

--Support at '3';

--National-scale long-term rating at 'AAA(slv)'; Outlook Stable;

--National-scale short-term rating at 'F1+(slv)';

--National-scale rating for local issues of senior unsecured debt at
'AAA(slv)';

--National-scale rating for local issues of senior secured debt at 'AAA(slv)'.

Agricola's ratings drives Inversiones Financieras Banco Agricola (IFBA)'s
national ratings, for which Agricola represents 97.5% of total assets.

Fitch has affirmed IFBA's national ratings as follows:

--National-scale long-term rating at 'AAA(slv)'; Outlook Stable;

--National-scale short-term rating at 'F1+(slv)'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria', Aug. 15, 2012;

--'Rating FI Subsidiaries and Holding Companies', Aug. 10, 2012;

--'2012 Outlook - Central America and the Dominican Republic', Dec. 13, 2012;

--'Central American Banks Withstand Financial Contagion Well-Positioned for
Growth', July 9, 2012;

--'Bancolombia', Sept. 19, 2012;

--'El Salvador', Jul. 31, 2012.

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=789344

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Contact:

Fitch Ratings
Primary Analyst
Diego Alcazar, +1-212-908-0396
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Edgar Cartagena, +503 2516-6613
Director
Edificio Plaza Cristal, Tercer Nivel.
79 Ave. Sur y Calle Cuscatlan,
Col. Escalon.
San Salvador, El Salvador.
or
Rene Medrano, +503 2516-6610
Senior Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com
 
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