Fitch Ratings has affirmed
Fitch has also withdrawn Supervielle's Support Rating of '5' and Support Rating Floor of 'NF' as these ratings are no longer relevant to the agency's coverage following the publication of its updated Bank Rating Criteria on
Key Rating Drivers
In Fitch's view, regardless of its overall adequate financial condition, Supervielle's VR and IDRs are constrained by the operating environment and
Highly Challenging Operating Environment: The operating environment remains adverse as asset quality continues to be pressured by a long recession, which has been exacerbated by the coronavirus pandemic and severe political uncertainties. Additionally, significant margin pressure due to regulatory imposed interest rates caps and floors and increasing operating costs due to continued high inflation have significantly affected profitability.
Challenging Asset Quality: Supervielle's asset quality has historically been somewhat weaker than that of its peers, mainly due to its focus on SME and retail lending, in addition to its exposure to consumer finance (around 7% of gross loans in
As of
Profitability Will Remain Under Pressure: In the first half of 2022, the bank's profitability deteriorated and the bank posted a net loss mainly reflecting increased losses at IUDU due to higher inflation and severance charges as well as still high credit costs in addition to the margin pressures mentioned above. As a result, the Supervielle's operating profit/risk weighted assets ratio fell to negative 2.3% at
Since
Adequate Capitalization: Since its IPO (in 2016 and 2017), Supervielle raised a total amount of
Satisfactory Funding and Liquidity Metrics: Supervielle is almost entirely funded through deposits, which accounted by 99.3% of its total funding as of
The bank's liquidity levels are adequate, and the liquidity coverage ratio (LCR) remained above 100% at 108.4% in
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
The IDRs and VRs of Supervielle would be pressured by a downgrade of
Any policy announcements that would be detrimental to the bank's ability to service its obligations, would be negative for creditworthiness.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
The IDRs and VRs would benefit from an upgrade of
VR ADJUSTMENTS
The Operating Environment score has been assigned below the implied score due to the following adjustment reason: Sovereign Rating (negative).
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
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