Fitch Ratings on Aug. 14 assigned Bolivia-based Banco Fassil SA B+ long-term foreign and local currency issuer default ratings and a "b+" viability rating.
Banco Fassil's viability rating, which drives its issuer default ratings, balances a rising company profile with weak profitability, Fitch said. In addition, the viability rating reflects the bank's sound but deteriorating asset quality, pressured capitalization and adequate liquidity levels. The bank's operating environment also factors in the viability rating.
Banco Fassil has met its growth strategy of maintaining its position as the sixth-largest bank in the system in terms of assets, despite a heavily regulated and competitive financial sector, Fitch said. It is also the fourth- and fifth-largest player in the SME and commercial market segments, respectively, beating other large banks.
However, regulatory requirements and tighter competition have led to a decline in the bank's profitability, the main weakness of its credit profile, Fitch noted. The rating agency added that recovery might only start at the end of 2019, and will depend on stronger net interest margins from lesser competitive pressures and stable impairment charges from a matured loan portfolio.
The ratings outlook is stable, with a limited upside potential.