Fitch Ratings on Dec. 21 assigned BB-(bra) long-term and B(bra) short-term national ratings on Brazil-based Banco Luso Brasileiro SA.
The outlook is stable.
The ratings reflect the bank's stable financial profile, as seen in its improved operating results since 2015. They also consider the bank's success in maintaining the development of its current business model.
However, these factors are offset by the brief history of the bank's current business model, its still-small franchise, the short period of positive operating results and a relatively high risk appetite due to its high client concentration and portfolio expansion in past years. The ratings also consider pressures on the bank's asset quality from Brazil's weak operating environment as well as its limited capital base and modest loss-absorbing cushion, Fitch said.