S&P Global Ratings on Dec. 13 affirmed its BB-/B global scale and brA-/brA-2 national scale issuer credit ratings on BRB-Banco de Brasília SA, while keeping the outlook at negative.

The ratings reflect the bank's weak business position due to its concentrated business profile as well as its moderate capital and earnings with a forecast risk-adjusted capital ratio of about 5.4% for the next two years. They also consider the bank's adequate risk position, average funding and adequate liquidity.

S&P said the bank benefits from stable funding and commercial conditions in Brazil's Federal District, which fully owns the bank, particularly from payroll lending to state employees. However, S&P also sees the district's funding for the bank to weaken given difficult financial conditions.

Meanwhile, the negative outlook reflects the pressure on the bank's asset quality due to its SMEs portfolio and the negative trend in Brazil's Banking Industry Country Risk Assessment's economic and industry risks.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.