Fitch Ratings on Aug. 14 upgraded Banco do Estado do Rio Grande do Sul SA's long-term national rating to A(bra) from A-(bra) and its short-term national rating to F1(bra) from F2(bra).
The ratings upgrade reflects improvements in Banrisul's financial profile, especially in its profitability and capitalization. These metrics are driven by a gradual enhancement in the Brazilian bank's asset quality, which has benefited from provisioning expenses as compared to local peers, Fitch said.
Meanwhile, Fitch affirmed the bank's B+ long-term foreign and local currency issuer default ratings, B short-term foreign and local currency issuer default ratings, "b+" viability rating and 4 support rating. The outlook on the long-term ratings is stable.
Banrisul's issuer default and viability ratings are highly influenced by the state of Rio Grande do Sul's operating environment. Aside from the bank's asset quality, the ratings also incorporate its local franchise, stable retail funding and adequate liquidity metrics.
Meanwhile, the bank's support rating reflects the limited likelihood of support from the state government in a crisis scenario, due to the bank's moderate systemic importance.