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S&P upgrades Banco Mercantil do Brasil as capitalization improves

S&P Global Ratings on March 11 raised its long-term national scale credit rating on Banco Mercantil do Brasil SA to brBBB from brBBB-, citing the bank's improved capitalization.

The rating agency in July 2018 placed the bank's regulatory capital assessment in the "at risk" category due to the possibility that it would not meet Brazil's minimum regulatory capital requirement. The bank's Tier 1 capital ratio fell to 8.6% in March 2018 because of deferred tax assets and a weak capital generation.

However, Banco Mercantil do Brasil's Tier 1 ratio has improved to about 10.3% in December 2018, which is above the regulatory minimum of 8.5%, following a capital injection of 60 million reais. The bank also slowed the pace of its loan expansion, which boosted capitalization levels.

The rating has a stable outlook, reflecting the rating agency's view that the bank's credit factors would remain unchanged over the next 12 months.

As of March 8, US$1 was equivalent to 3.86 Brazilian reais.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.