Fitch Ratings on Aug. 9 affirmed the long-term national rating of Banco de Desarrollo Rural Honduras SA, or Banrural Honduras, at AA(hnd), and the short-term rating at F1+(hnd).
Fitch also affirmed Banco Financiera Centroamericana SA, or Ficensa's long-term national rating at A-(hnd) and the short-term rating at F1(hnd).
The outlook on both Honduran banks' long-term ratings is stable.
Banrural Honduras' ratings reflect the potential support from its main shareholder, Guatemala's Banco de Desarrollo Rural SA, given the unit's high importance. The parent's willingness to support is also associated with its risk of reputation in case the Honduran subsidiary defaults.
Banrural Honduras had an operating profit-to-risk-weighted assets ratio of 1.2% as of March 2017, which Fitch expects will be stable. Loans over 90 days as a portion of the portfolio were at 2.3%, compared to the system average of 2.1%. Its Fitch Base Capital indicator was 10.2%.
Meanwhile, Ficensa's ratings reflect its intrinsic financial profile, which incorporates a low risk appetite and high credit quality due to a conservative credit policy. It also has an adequate equity position, with a Fitch Base Capital indicator of 12.7% that remained relatively stable. Its delinquency ratio was 0.3% and its past-due portfolio coverage was 6.9x as of March 2017, which stand out in Honduras' banking system.
However, these are offset by the bank's low and decreasing financial performance, which reflects poor portfolio performance, higher funding costs and administrative expenses. It also has a modest franchise that affects high concentrations on the balance sheet.