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S&P places Banca Mifel on CreditWatch positive in light of IPO plan

S&P Global Ratings on Oct. 16 placed Banca Mifel SA's BB long-term global and mxA Mexican national scale issuer credit ratings on CreditWatch with positive implications.

The placement follows news of a planned initial public offering by parent company Grupo Financiero Mifel SA de CV within the next few days.

The IPO could allow the rating agency to revise Banca Mifel's risk-adjusted capital ratio to a stronger category of above 10%, which could lead to a ratings upgrade for the lender. Without the IPO, the bank is expected to end the year with a RAC ratio of about 8%.

"We'll incorporate in our projections that the final shareholder's capital would increase to around 10.0 billion [Mexican pesos] and that the bank will grow its loan portfolio consistently by around 25% for the next three years," S&P said, adding that this capital increase should be enough for the bank to maintain a RAC ratio consistently above 10%.

Banca Mifel's ratings reflect revenue that is growing primarily from its credit business, although the bank still has a small market share in Mexico's banking industry. The bank's asset quality metrics continue to compare well to the industry's average, but loan portfolio concentrations remain, mainly by single name exposures, S&P said.

The rating agency's RAC ratio projection for the bank is 11.2% on average for 2019 to 2020.

El Financiero recently reported that Grupo Mifel is looking to raise up to about 8.45 billion Mexican pesos in a public share offering on Oct. 18. The company reportedly plans to offer 167 million series O shares in a base offering at between 35 pesos and 40 pesos each.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings document referred to in this news brief can be found here.

As of Oct. 16, US$1 was equivalent to 18.75 Mexican pesos.