Standard & Poor's Ratings Services on March 29 affirmedBanco do Nordeste do BrasilSA's global and national issuer credit ratings at BB/B and brAA-,respectively, but revised the bank's stand-alone credit profile to bb from bb+.
The outlook is negative.
The ratings action reflects the bank's adequate businessposition, considering its market share in Brazil's northeast region, as well asits adequate capital and earnings, moderate risk position, average funding, andstrong liquidity, S&P said. The rating agency also believes that the bankcould receive extraordinary support from the Brazilian government, if needed.
"We revised BNB's risk position to moderate fromadequate because we believe the bank is exposed to riskier segments than theindustry on average (such as SMEs and microcredit), given its social role andmaterial exposure to those segments," S&P noted, adding that the company'sasset quality indicators could continue to deteriorate due to Brazil's toughereconomic environment "especially in the northeast region of Brazil wherethe economic recession has been stronger."
Looking forward, S&P warned that asset quality willremain a concern for the bank, as a longer economic recession is forecasted forBrazil.
The negative outlook for the bank the outlook on the foreigncurrency sovereign rating for Brazil itself, S&P noted.
S&P Ratings andGlobal Market Intelligence are owned by McGraw Hill Financial Inc.