Fitch Affirms Banco Bradesco's IDR and Issuance
2009-06-15 16:26:05 -
Fitch Ratings has affirmed all ratings of Banco Bradesco S.A. (Bradesco) and its issuance as follows.
Banco Bradesco S.A.
--Long-term Foreign Currency Issuer Default Rating (IDR) at 'BBB'; Stable Outlook;
--Short-term Foreign Currency IDR at 'F2';
--Long-term Local Currency IDR at 'BBB+'; Stable Outlook;
--Short-term Local Currency IDR at 'F2';
--Individual Rating at 'B/C';
--Support rating at '3';
--Support rating floor at 'BB';
--National long-term rating at 'AAA(bra)'; Stable Outlook;
--National short-term rating at 'F'+(bra)'.
Bradesco Leasing S.A. Arrendamento Mercantil - 9th Issuance of Debentures
--National long-term rating at 'AAA(bra)'.
Bradesco's Local Currency IDRs, which are above Brazil's IDRs, and its National Ratings reflect its broad national franchise with a strong track record of consistent results through turbulent economic cycles, achieved via solid, conservative management of a diversified business and revenue base, as well as its huge local distribution and client base, and strong liquidity. The Foreign Currency IDRs are constrained by Brazil's Country Ceiling. The ratings also reflect the bank's strong performance since 2004, driven by loan growth in consumer finance and lending to small and medium businesses, and cost reductions, which have improved efficiency.
The Local Currency IDR is determined by the Individual Rating. This could be affected by performance changes due to capitalization levels and quality and maintenance of asset quality which would allow consistent profitability, even in an adverse scenario. An eventual deterioration in Brazil's operating environment, as well as a strong increase in delinquencies, could exert downward pressure on its ratings.
Bradesco's strategy is to maintain its strong position in the Brazilian financial system, working with a diversified franchise based on financial and insurance services. Despite the focus on organic growth and on Brazilian domestic market, Bradesco has acquired some small cap niche financial institutions. On June 4, 2009, Bradesco announced an agreement aiming at the acquisition of the totality of Banco IBI S.A.
(IBI) capital stock.
IBI is the fifth largest Brazilian branded credit card issuer, standing out in the Private Label segment. Posting total assets of BRL5.6 billion in December 2008, it was part of the C&A Group, an important conglomerate in the retail fashion market. The transaction, subject to regulatory authorities' approval, will almost double Bradesco's credit card base from 35.3 million to 65.9 million.
Owing to the global financial crisis, Bradesco has benefited strongly from the flight to quality in the local market, mainly shown in its increased deposits. As a result, unlike most banks and despite tighter lending standards, it continued to increase lending (32% in 2008)though growth slowed substantially in the last months of the year and in first quarter-2009 (1Q'09). It has also boosted liquidity to high levels and maintains its plan to open more branches. Despite a probable decline due to less credit expansion in 2009 (13%-17%) and increased provisions as delinquencies rise, profitability is expected to be, at a minimum, satisfactory (19.7% in 1Q'09), with no major pressure on the bank's capital base.
Bradesco is one of the largest financial conglomerates in Latin America and among the market leaders in most of its business lines. It is controlled by an entity managed by the bank's senior executives.
Fitch's national ratings provide a relative measure of creditworthiness for rated entities in countries where the sovereign's foreign and local currency ratings are below 'AAA'. National ratings are not internationally comparable since the best relative risk within a country is rated 'AAA' and other credits are rated only relative to this risk.
They are signified by the addition of an identifier, for the country concerned, such as 'AAA (bra)' for national ratings in Brazil.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .
Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch RatingsPedro Gomes, +55 11 4504-2600, Sao PauloPeter
Shaw, 212-908-0553, New YorkorMedia Relations:Brian
Bertsch, 212-908-0549, New YorkEmail: brian.bertsch@fitchratings.com : mailto:brian.bertsch@fitchratings.com Cindy
Stoller, 212-908-0526, New YorkEmail: cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com
