Moody's on March 2 revised its outlook on the ratings of Colombia's Banco Davivienda SA to negative from stable, reflecting the deterioration of the bank's asset risk and profitability metrics over the past year.
The rating agency said the deteriorating trend for the bank's metrics is expected to continue, as Moody's expects there will only be slow recovery for the country's economic growth.
Problem loans as a portion of gross loans grew to 2.9% in September 2017, from 2.0% a year earlier, with the increase attributed to the mortgage and commercial segments.
A relatively small number of large exposures, such as to power utility firm Electricaribe and certain mass transit companies mainly caused the deterioration in the commercial segment.
Moody's added while the bank's mortgage lending has grown faster compared to the Colombian market as a whole over the past two years, it has become more exposed than its peers to mortgages to low-income households, particularly for loans that were granted without government subsidies.
Meanwhile, Banco Davivienda's long and short-term global local and foreign currency deposit ratings were affirmed at Baa3 and P-3, respectively. Its long and short-term counterparty risk assessments were affirmed at Baa2(cr) and P-2(cr), respectively.
The bank's long-term foreign currency senior unsecured debt rating was also affirmed at Baa3, while both its baseline credit assessment and adjusted baseline credit assessment were affirmed at "ba1."
