S&PGlobal Ratings on July 6 lowered its long-term issuer credit rating onVision Banco SAECA toB from B+ and its outlook to stable from negative after revising the bank'srisk position to moderate from adequate.
Therevision on the risk position assessment reflects S&P's view that assetquality indicators would continue to be at levels fairly above the systemaverage for the next 12 to 18 months, given the bank's exposure to sectors moresusceptible to soft economic conditions. In turn, S&P revised the bank'sstandalone credit profile to "b" from "b+."
Meanwhile,S&P downgraded the bank's rating as it does not incorporate notching forextraordinary support from either its group or the government.
Aside fromthe bank's moderate risk position, the rating also reflects an adequatebusiness position among Paraguayan banks, weak capital and earnings, aboveaverage funding due to a well-diversified and stable deposit base as well as anadequate liquidity.
S&Pexpects the bank's asset quality metrics to stabilize and return to manageablelevels in the next six to 12 months, as reflected in its stable outlook.However, the bank's asset quality will remain higher than the system average,the rating agency noted.
Whileprofitability will also gradually improve in the 18 to 24 months, the bank'srisk-adjusted capital ratio will remain below 5%, S&P added.
S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.