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Fitch affirms Banco Davivienda Salvadoreño with a negative outlook


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Fitch affirms Banco Davivienda Salvadoreño with a negative outlook

Fitch Ratings on April 7 affirmed Banco Davivienda Salvadoreno SA's long-term issuer default rating at BB-, as well as its support rating at 3 and viability rating at "b." The outlook on the long-term rating is negative.

The ratings reflect the likelihood of support from the bank's parent company, Colombia-based Banco Davivienda SA, with the rating agency viewing the probability of support as moderate.

The bank's issuer default rating is constrained by El Salvador's country ceiling of BB-, Fitch said, adding that the negative outlook is in line with the sovereign's rating as well.

The bank's profitability is modest compared to the industry average and is "underpinned by a moderate net interest margin and operating efficiency and a high cost of loans reserves in the last year," the rating agency said in an annual review of the bank.

"Improvements on profitability could only come from further reduction of the operational costs and credit costs, but those are very unlikely in a relevant way in the ratings horizon," Fitch added.