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Fitch: Ecuadorian banks' performance mired by weak economy

Fitch Ratings said Ecuadorian banks will continue to be pressured by the country's weak economy.

"Ecuador's operating environment highly influences the banks' creditworthiness, as it limits their growth, profitability and internal capital-generation capacity," Fitch said in a Dec. 13 report.

The rating agency expects Ecuador's economy to contract 2% in 2016, due to the sharp decline in oil-sector revenues that impacted government spending. It also sees banks' financial performance to continue declining in 2017 due to the weak economic growth.

Credit quality could mildly deteriorate next year, although this could be offset by banks' continued operation adjustment to minimize loan growth if needed, Fitch said.

However, banks' capitalization ratios will remain stable and liquidity will remain significantly better than those banks operating in Fitch's similarly rated countries, the rating agency said.