Fitch Ratings on Aug. 11 affirmed the long- and short-term ratings of Colombia's Banco Cooperativo Coopcentral at AA-(col) and F1+(col), respectively. The outlook for the long-term rating is stable.
The ratings are based mainly on Coopcentral's second-tier bank business model, which generates high concentration on both sides of its balance sheet, its modest profitability, robust capitalization and stable funding, Fitch noted.
Fitch believes Coopcentral has maintained ample solvency levels, which still hold enough room for supporting growth. Although its capitalization levels exceed its peers, the company is by nature more sensitive to a portfolio deterioration that could affect its patrimonial position. The rating agency also recognized the company's high solvency levels as one of its main strengths.
Although the bank's NPR levels have been rising for the past three years as a result of a credit profile deterioration within the country's oil sector and among SME-related entities, the ratios remain low and in line with current ratings, the agency noted.
Provisions remain high in comparison with other commercial banks, Fitch remarked, adding that exposure to its top 20 debtors as of March is moderate, reaching 25.4% of the total portfolio.
The bank relies mainly on certificates of deposits for funding, Fitch said. The CDs, which come from affiliated cooperatives and hold a renewal rate of over 85%, provide a financial stability that helps offset mismatches between active and passive rates as well as asset and liability.
The company's margins, however, are lower than the rest of Colombia's financial entities, which has resulted in higher provision expenses, Fitch remarked.