Fitch Ratings on May 11 revised the outlook on the long-term issuer default ratings of six Argentine financial institutions to stable from positive.
The affected companies include Banco Santander Río SA, BBVA Banco Francés SA, Banco Macro SA, Banco Supervielle SA, Tarjeta Naranja SA and Banco de la Ciudad de Buenos Aires. These are among the largest private-sector financial institutions in Argentina, Fitch said.
The outlook revision follows the same action on Argentina's sovereign rating.
The issuer default ratings of Banco Santander Río, BBVA Banco Francés and Banco de la Ciudad de Buenos Aires are driven by parent support while those of Banco Macro and Banco Supervielle are driven by their viability ratings. Meanwhile, Tarjeta Naranja's issuer default rating is based on its stand-alone intrinsic financial profile.
However, Fitch said that the ratings of the financial institutions are constrained by Argentina's low sovereign rating, given the influence of the operating environment on the entities. Earlier in May, Banco Central de la República Argentina raised its benchmark rate to a record 40% as the country faces above-target inflation and a declining peso.
"Specifically, the central bank's recent monetary policy actions and the depreciation of the Argentine Peso raise concerns on these institutions' timely ability to reprice its assets, the impact of increased rates and currency volatility on loan performance, as well as the implications for loan growth and profitability," Fitch said.