Regulation of rates of changes in the rating of 2 banks

 

The regulation of interest rates and other aspects of the Financial Services Act 393 changed the outlook for risk ratings of Banco Solidario (BancoSol) and Bank Fortaleza.
The impact of regulation changed the trend "Stable" to "Negative" on both banks.
In the case of BancoSol, the rating agency EASA Ratings, associated with Fitch Ratings in its latest report announced that September 30 "changed the outlook to 'Negative' from 'Stable' of risk ratings assigned Short Term Local Currency and Foreign Currency Long-Term Local Currency and Foreign Currency Issuer and Banco Solidario SA, based on the financial statements at June 30, 2014. "
Changing the perspective of this entity is based in today's challenging regulatory environment, which in the opinion of EFSA Ratings adversely affect the bank, as its strategy, niche market and current target portfolio will struggle to meet quotas on loans.
Furthermore, "the regulation of rates will affect your financial spread (the difference between the rates for loans and deposits) and its performance in the medium term, which would mean less chance of capitalization," says the report.
According to EASA Ratings, operating income of the entity are significantly dependent on net interest income (97.8%), which exposes the bank to risks from changes in interest rates and the performance of the loan portfolio of credits.
"The regulation of lending and deposit rates and lending quotas in some areas, due to the regulation of the Financial Services Act, Banco Solidario negatively influence their peers and concentrates solely on revenues from performing loans."
In another report, issued on September 30, EASA Ratings also changed the outlook from "Stable" to "Negative" from risk ratings assigned Short Term Local Currency and Foreign Currency Long-Term Local Currency and Foreign Currency Issuer and Fortress Bank SA, based on its financial statements to 30 June 2014.

buisness loans

The adjustment is based on today's challenging regulatory environment, according to the agency, adversely affect the bank, as its small size and current target portfolio will struggle to meet quotas placing loans.
In addition, regulation of financial spread rates affect their performance and medium term, which would mean less chance of capitalization, as in the case of BancoSol.
The Financial Services Act and regulations stipulate that microenterprise rates should not exceed 11.5% and for small businesses, 7%.

Institutions should allocate 6% of their profits to a guarantee fund.

Financial Analysis
Concentration For the niche that focuses, Banco Solidario shows a high dispersion of their claims in more than 244,000 borrowers and intangible level concentrations of its 25 largest borrowers. 74% of the portfolio is placed in microcredit, which clearly reflects its microfinance nature.
An Improved materials diversification of its operating income and improved their equity level would improve the rating of Banco Solidario, according EASA Ratings. A sustained decline in liquidity and capital base relative to its level of operations, along with a deteriorating financial profile as a result of the new regulatory environment could pressure the ratings downward.

small business loan

The reports stress the strengths of the two banks

The report by the rating agency EASA Ratings highlights not only the threats but also the strengths of Banco Solidario (BancoSol) and Fortress Bank in the market.

In the case of BancoSol, the report stresses that the entity, even though there is high competition for entry of new entities to the niche in which it operates, has maintained its market share in the last four steps.
BancoSol "to June this year, with 1177.7 billion in assets, is the leading institution among eight institutions in its sector (banks and microfinance niche SMEs), following him closely Banco FIE".
It presents favorable levels of performance and profitability by its steady and healthy loan portfolio growth and have higher margins than market intermediation.
Profitability indicators are higher relative to those reported in 2013 and those of their peers, due to a growing interest margin and bounded administrative and operating expenses. It also has a satisfactory asset quality and adequate risk profile.
In June, showing a growth of its gross loan portfolio of 5.2% compared to December 2013 and maintains satisfactory indicators of default (0.9%) and coverage (603.3%).
According to EFSA, the Bank has outstanding Fortaleza solvency indicators that compare favorably with the industry average, as our leverage ratio.
Larger size and market share, diversification of its operating income, steady growth with adequate asset quality improve their qualifications.

refinance home loan