Moody's on Dec. 6 raised its outlook on Banco del Bajío SA, citing an increase in the Mexican bank's capitalization levels resulting from its initial public offering in June, as well as improvements in its asset quality.
In addition to raising the outlook to positive from stable, Moody's affirmed all of the bank's ratings and assessments, including its long- and short-term global local and foreign currency deposit ratings at Baa3/Prime-3.
The lender's long- and short-term national scale deposit ratings were maintained at Aa3.mx/MX-1, while its long- and short-term counterparty risk assessments were affirmed at Baa2(cr)/Prime-2(cr).
The company's baseline credit assessment and adjusted baseline credit assessment remain at "ba1."
"The rating action also considers the recent improvement in profitability, which has been driven by its largely stable funding cost in a period of rising interest rates," Moody's said, noting that the bank's tangible common equity rose to 15% of its adjusted risk-weighted assets following the IPO from 12.1% as of end-2016.
Banco del Bajío had a record-low nonperforming loan ratio of 0.9% as of September, reflecting the bank's conservative origination practices. The company has also managed to diversify its geographic footprint across different Mexican states, the rating agency added.