Fitch Ratings on May 29 lowered the long-term national ratings of Guatemala-based Financiera de Occidente SA to B-(gtm) from BB+(gtm) and Tarjetas de Crédito de Occidente SA to B(gtm) from BB+(gtm), while revising their outlooks to negative from stable.
The downgrade of Financiera de Occidente's national rating reflects a deterioration in its loan portfolio, given a significant increase in its foreclosed asset account as well as greater restructuring and loan delinquencies. As a result, the bank could record significant operating losses and negative equity, Fitch said.
Meanwhile, Tarjetas de Crédito de Occidente's lower rating also considers a deterioration in its loan book and reduced profitability indicators. Furthermore, the company's financial profile is exposed to a potential contagion risk given Financiera de Occidente's weakened credit profile.
The rating agency affirmed the companies' B(gtm) short-term national ratings.
Both companies are part of Grupo Financiero de Occidente.