Fitch Ratings has taken the following rating actions on Banco Pine S.A. (Pine):
--Foreign and Local Currency Long-Term IDR upgraded to 'BB-' from 'B+';
--Foreign and Local Currency Short-Term IDRs affirmed at 'B';
--Individual Rating upgraded to 'C/D' from 'D';
--Support Rating affirmed at '5';
--Support Rating Floor affirmed at 'NF';
--National Long-Term Rating upgraded to 'A(bra)' from 'A-(bra)';
--National Short-Term Rating upgraded to 'F1(bra)' from 'F2(bra)'.
At the same time, Fitch has revised the Rating Outlook to Stable from Positive.
Fitch has also upgraded the Foreign Currency Long-Term rating to 'B' from 'B-/RR6' of Pine's USD125 million subordinated notes due Jan. 6, 2017.
The rating actions reflect Pine's consistent performance in its core businesses throughout the global economic crisis and its adequate credit quality and capital ratios which compare favorably with peer banks.
Pine's ratings also reflect its agility in adapting to economic volatility and its strategy of consistently managing risks and adjustments to its balance sheet. Pine is a medium-sized institution primarily financed through institutional and interbank funding and focused on the middle market and business opportunities in certain niche areas. Given its business model, the bank has significant customer concentrations in assets and liabilities but has maintained prudent credit management and liquidity, especially during adverse scenarios and during fluctuations in the economic cycle such as the recent global financial crisis. Its main challenges are maintaining its growing revenues and funding diversification in view of higher business concentration and competition.
Since 2H'09, Pine resumed growth in its small- and medium-sized business (SMEs) portfolio, also increasing the revenues derived from cross selling with the treasury, addressed to clients, and financial assistance services. The latter was developed through partnership in some niches such as private equity and M&A, aiming to aggregate experience and franchise. The still reduced availability of credit lines to the market in 2009 has also allowed the bank to reach larger-sized companies, with good spreads, which benefits its loan book quality and its modest returns, still in line with its peers during this period.
Pine's funding base, less pressured by the discontinuity of payroll deductible loans since 2008, resumed growth along 2009. The deposit base, concentrated on institutional investors, increased a strong 107% in the year. Since 2007, when the bank issued equity in an IPO, Pine has sought to diversify its revenues and funding sources, with an aim at reducing the high concentration, which Fitch considers important. The bank's issue of USD125 million subordinated debt in February 2010, with maturity within seven years, (considered as Tier II for regulatory purposes) allowed Pine to lengthen its funding base for medium-term growth. Pine's asset/liability mix is well balanced, with concentration on relatively shorter corporate lending, and the increase in the average life of its liabilities,
The main methodology used for this rating action is outlined in 'Global Financial Institutions Rating Criteria', Dec. 29, 2009, which is available at www.fitchratings.com and www.fitchratings.com.br.
Additional information is available at www.fitchratings.com.
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