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Fitch upgrades BRB-Banco de Brasília on improved profitability, capitalization

Fitch Ratings on Aug. 14 raised its ratings on BRB-Banco de Brasília SA, with the bank's long-term foreign and local currency issuer default ratings moving to BB- from B+.

Fitch also upgraded the Brazilian bank's long-term national rating to A+(bra) from A(bra) and viability rating to "bb-" from "b+." Meanwhile, the bank's B short-term foreign and local currency issuer default ratings, F1(bra) short-term national rating and 4 support rating were affirmed. The outlook for the long-term ratings is stable.

The upgrade of the bank's viability rating, which drives its issuer default ratings and national ratings, reflects significant improvements in its profitability and capitalization over the past 15 months, compared with 2015 when its key credit metrics significantly deteriorated, Fitch said. The rating agency considers the operating environment and company profile as highly influential factors for the viability rating.

The ratings also mirror the bank's solid regional franchise in Brazil's Federal District as well as its stable business model.

Meanwhile, the support rating reflects the limited support probability from the bank's majority shareholder, the Federal District government. The state has limited capacity for support, in case of need, despite having high willingness to do so, Fitch said. The bank is strategically important for the state, has a meaningful market share in the state's loans and time deposits and performs a role that promotes development and growth in the region.