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Moody's affirms Puerto Rican banks' ratings after Hurricane Maria

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Moody's affirms Puerto Rican banks' ratings after Hurricane Maria

Moody's on Oct. 10 affirmed the ratings of three Puerto Rico-based banks and their subsidiaries, following the damage sustained from Hurricane Maria.

The rating agency affirmed San Juan-based Banco Santander Puerto Rico's long-term bank deposits rating at A2, its short-term bank deposits rating at P-1 and its senior unsecured bank note program rating at (P)P-2, among others. Still under review for upgrade are its Baa2 long-term issuer rating and (P)Baa2 long-term senior unsecured bank note program rating.

The outlook remains under review for upgrade. Banco Santander Puerto Rico is a subsidiary of Spain's Banco Santander SA.

Moody's affirmed Banco Popular de Puerto Rico's long-term issuer rating of B2, long-term bank deposits rating of Ba2 and short-term bank deposits rating of "not prime." The bank is a subsidiary of Hato Rey-based Popular Inc., the ratings of which were also affirmed. Its ratings outlook remains stable.

Included in ratings affirmed for San Juan-based FirstBank Puerto Rico are its long-term issuer rating of Caa1, its long-term bank deposits rating of B1 and its short-term bank deposits rating of "not prime." FirstBank is a subsidiary of First BanCorp. The ratings outlook remains stable.

The action reflects Moody's view that the companies have sufficiently high capital ratios to meet regulatory requirements, despite hurricane-related costs, loan loss provisions and the consequent operating losses. Moody's anticipates a halt in new originations, charge-offs as bank customers suffer from the slow repair of power lines, a decrease in noninterest income as fees are waived, and higher operating expenses. Moody's calculates a possible near-tenfold increase in provisions from the recent quarter's levels; capital ratios would nevertheless remain above regulatory minimums.