Standard & Poor's Ratings Services on April 26 lowered itslong-term issuer credit ratings on RepublicFinancial Holdings Ltd. to BBB from BBB+ and affirmed its BBB+ ratingson First Citizens Bank Ltd.
S&P also affirmed the short-term ratings on both companiesat A-2. The outlook on all ratings remains negative.
The actions on Republic Financial follow S&P's of Trinidad and Tobago'ssovereign credit ratings earlier in April. After reviewing the company's forecastedrisk-adjusted capital ratio for the next 18 months, assuming lower credit growthprospects of 7% on average between 2016 and 2017, the rating agency said it expectsthe firm's capitalization to remain strong.
The actions on First Citizens Bank reflect S&P's revisionof the bank's capitalization to very strong from strong. The rating agency expectshigher capitalization due to lower loan portfolio growth of 4.5% on average for2016 and 2017, coupled with a conservative investment management strategy.
Meanwhile, S&P maintained its banking industry risk assessmentscore on Trinidad and Tobago at group 5, which anchors banks operating in the countryat "bbb-." However, since the country's economic contraction continuesto pose challenges for the financial system, which could translate into higher economicimbalances and asset quality deterioration, S&P revised its economic risk trendto negative from stable.
The negative outlooks on both Republic Financial and First CitizensBank consider that the ratings on both entities could be lowered by one notch ifS&P were to downgrade the sovereign and if the companies' respective stand-alonecredit profiles and current link and role to the government remain unchanged.
S&P Ratings and GlobalMarket Intelligence are owned by McGraw Hill Financial Inc.