Fitch Ratings has affirmed
The Rating Outlook is Negative.
Fitch has also upgraded the Long- and Short-Term National Scale ratings of
Fitch upgraded the National Scale Ratings of Monex SAB as a result of its double leverage metric consistently below 120% in the last four years supported by a good internal capital generation. This has offset recent company acquisitions despite the challenging operating environment (OE). The Negative Outlook is aligned with the bank's Outlook, which still reflects the weakened OE.
Fitch also upgraded the senior unsecured debt issued by Monex SAB to 'AA-(mex)' from 'A+(mex)'.
Key Rating Drivers
VR and IDRs:
National Ratings:
SR and SRF: Fitch affirmed the Support Rating (SR) and Support Rating Floor (SRF) at '5'/'NF' to reflect the bank's low systemic importance. However, possible, external support cannot be relied upon.
MONEX SAB
National Ratings: The ratings consider the long-track record and leadership of the Mexican operating subsidiaries in the FX trading local market as well as the consistent, stable and diversified earnings generation of its consolidated operations through the economic cycle. Despite Monex SAB is a pure holding company whose liquidity and interests and principal payment of its senior debt wholly depends on subsidiaries dividend payments; its liquidity and refinancing risk is well mitigated. The ratings upgrade considers the double leverage ratio that has remained below 120% in the last four years and that stood at 109.6% at 2Q21. In spite of a possible increase of the double leverage over the coming 18 months, Fitch does not expect a material increase above 120% in the short- to mid-term.
Senior Unsecured Debt Rating: Fitch upgraded the
MONEX CB
National Ratings: Monex CB's ratings and Outlook are aligned with those of
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Banco Monex VR, IDR and National Ratings:
If the CET1 capital ratio declines consistently below 13% or if asset quality problems result in higher credit costs that pressure the operating profit to RWA ratio to a level consistently below 3%;
If Fitch revises downward its assessment of the OE Banco Monex's IDRs and VR would maintain the same relativity to
Monex SAB:
The national ratings would remain at the same level as
Monex CB:
The national ratings are aligned with those of
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Banco Monex VR, IDR and National Ratings:
The Negative Outlook could be revised back to Stable if the impact of the pandemic and uncertainties in the OE decrease while the entity continues to adequately manage its credit profile allowing for a relatively fast recovery.
An upgrade of
Monex SAB:
The national ratings are at the highest possible level under Fitch's criteria due to being aligned with
The debt rating would mirror any changes to the issuer's national scale ratings.
Monex CB:
The national ratings are aligned with
The SR and SRF are at their lowest possible level. Any upside potential for both is limited and can only occur over time with a material increase in the bank's systemic importance.
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 '
Summary of Financial Adjustments
Monex SAB: Fitch classified pre-paid expenses, other deferred assets and goodwill as intangibles and deducted them from total equity due to their low absorption capacity under stress. Fitch re-classified the net operating leases classified as fixed assets as other earning assets.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
Monex CB: Monex CB's ratings and Outlook are aligned with those of
Monex SAB: Monex SAB's national ratings are aligned with those of its main operating subsidiary,
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
RATING ACTIONSENTITY/DEBT RATING PRIOR
Banco Monex, S.A. , Institucion de Banca Multiple, Monex Grupo Financiero LTIDR BB + Affirmed BB+
ST IDR B Affirmed B
LC LTIDR BB + Affirmed BB+
LC ST IDR B Affirmed B
Natl LT AA-(mex) Affirmed AA-(mex)
Natl ST F1+(mex) Affirmed F1+(mex)
Viability bb+ Affirmed bb+
Support 5 Affirmed 5
Support Floor NF Affirmed NF
Monex Casa de Bolsa, S.A. de C.V. , Monex Grupo Financiero Natl LT AA-(mex) Affirmed AA-(mex)
Natl ST F1+(mex) Affirmed F1+(mex)
Monex, S.A.B. de C.V . Natl LT AA-(mex) Upgrade A+(mex)
Natl ST F1+(mex) Upgrade F1(mex)
senior unsecured
Natl LT AA-(mex) Upgrade A+(mex)
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
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