Fitch Ratings on Dec. 22 affirmed Financiera Finca Nicaragua SA's long- and short-term national ratings at BBB+(nic) and F2(nic), respectively. The outlook on the long-term rating is stable.
In affirming the ratings, Fitch pointed to the company's "intrinsic financial performance, which considers its improved financial performance, good credit quality and pressure capitalization."
The action also took into account its membership with U.S.-based NGO Finca International, which focuses on financing micro enterprises, Fitch said.
Fitch said it views Finca Nicaragua's level of coverage reserves for bad loans to be adequate, with the rating agency expecting the company's delinquency ratio holding close to the 1.1% ratio seen at September.
"In Fitch's opinion, the entity monitors its liquidity risk adequately and its funding is contracted in accordance with its portfolio's profile," the rating agency said. "In addition, asset and liability management benefits from the rapid recovery of its loans and the predictability of its funding structure."
The company's capital, however, is under pressure and is on a decreasing trend as asset growth has come in substantially higher than internal capital generation, Fitch noted. The rating agency does not foresee "material changes in capitalization levels in the medium term, given the entity's growth targets."