Moody's on Aug. 13 upgraded Banco Hipotecario del Uruguay's standalone and adjusted baseline credit assessments to "ba2" from "ba3," due to continuous improvements in the mortgage lender's asset risk.
The Uruguayan bank's prudent underwriting standards helped in the decline in its problem loans, while growth in lending resulted in a lower problem loan ratio. Moreover, the bank's problem loan ratio stayed below the system delinquency of 3%, Moody's said.
The upgrade also reflects the bank's strong capitalization and proven access to stable, low-cost demand and saving deposits, the rating agency said.
The other ratings and assessments of Banco Hipotecario del Uruguay, along with those of fellow Uruguayan bank Banco de la República Oriental del Uruguay, were affirmed. These include their Baa2 long-term global local and foreign currency deposit ratings and Aaa.uy long-term national scale local and foreign currency deposit ratings.
The rating action on Banco de la República Oriental del Uruguay reflects its leading market shares in loans and deposits, diverse revenue structure and access to low-cost, granular retail deposits as well as to substantial liquid assets. The bank's capitalization and good profitability also serve as credit strengths, although its high asset risk metrics constrain its ratings.