Fitch Affirms Banco Multiple Leon at 'B+'; Outlook Positive

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings for Banco Multiple BHD Leon S.A. (BHDL) and its related entity BHD Leon Puesto de Bolsa (BHDLPB). A full list of rating actions follows at the end of this release.

Given BHDL's stable financial performance and profile, Fitch has affirmed all of the bank's ratings. The Positive Outlook on BHDL's Long-Term Issuer Default Ratings (IDRs) and National Rating are in line with the Dominican Republic's sovereign rating.

KEY RATING DRIVERS BHDL

IDRS, VR, SUPPORT AND NATIONAL RATINGS

BHDL's Viability Rating (VR), or standalone creditworthiness, drives its Long-Term IDRs and National Ratings. The bank's ratings do not consider any support, resulting in a Support Rating of '5' and a Support Floor of 'NF'.

The bank's VR is highly influenced by the operating environment and asset quality. Additionally, the bank's VR reflects its resilient performance, sound capitalization, stable funding base and strengthened franchise.

BHDL's financial performance is robust and resilient. Profitability is driven by ample margins benefiting from low-cost deposits and credit expansion into higher-margin segments. A clear focus on cost control, allows BHDL to record robust efficiency ratios compared to the local market average.

A deterioration of four of the largest exposures in the commercial segment drove a moderate deterioration in BHDL's loan quality metrics. Thus, the impaired loans to total loans ratio increased to 1.95% at March 2016 from 1.66% at YE14, while reserve coverage of past due loans decreased to 241% from 302.9% at YE14. Nevertheless, nonperforming loans still stand at a reasonable level in light of low concentrations, while reserve coverage remains conservative and high compared with local and international peers.

BHDL has one of the strongest levels of capital among its closest Dominican peers. Bolstered by internal capital generation, sound profitability and moderate cash dividend payout, BHDL's Fitch core capital to risk-weighted assets ratio reached 16% at YE15. The bank's cushion against unexpected losses should also be viewed in light of large loan loss reserves.

BHDL's successful franchise, distribution network and its reputation as a longstanding, conservative institution support a well-diversified, stable and relatively low-cost funding base.

BHDL consolidated its position as the second-largest private-sector bank in DR, from the merger with the former Banco Multiple Leon on 2014. The bank's franchise is well known and strong locally, while it has positioned itself as a highly competitive entity in the corporate business segment. The bank has also successfully increased its penetration in the fastest growing and profitable retail segment, which has widened its deposit base and reduced funding costs.

KEY RATING DRIVERS BHDLPB

NATIONAL RATINGS

BHDLPB ratings reflect the operational and financial support provided by BHDL and its sole shareholder Centro Financiero BHD Leon (CFBHDL). In Fitch's view, BHDLPB's rating is aligned with that of CFBHDL, as it is key and integral part of its business and provides some financial products to core clients. Furthermore, a clear commercial identification among this entity with BHDL and CFBHDL, and the reputational risk at which they would be exposed in the case of eventual troubles at BHDLPB results in a high probability of direct or indirect support by BHDL and CFBHDL, should it be required.

RATING SENSITIVITIES BHDL

IDRS, VR AND NATIONAL RATINGS

An upgrade of the sovereign's ratings could lead to an upgrade of BHDL's ratings if the bank sustains its current strong financial performance and adequate capitalization. Deterioration in the bank's capital metrics, such as Fitch core capital to risk-weighted assets ratio falling below 8%, together with asset quality deterioration, could pressure creditworthiness.

RATING SENSITIVITIES BHDLPB

NATIONAL RATINGS

An upgrade in BHDL's ratings could lead to an upgrade of BHDLPB. A negative change in the capacity or propensity of CFBHDL to provide support could pressure creditworthiness.

Fitch has affirmed the following ratings:

Banco Multiple BHD Leon S.A.:

--Foreign and Local Currency Long-Term IDR at 'B+', Outlook Positive;

--Foreign and Local Currency Short-Term IDR at 'B';

--Viability Rating at 'b+';

--Support Rating at '5';

--Support Floor Rating at 'NF'.

--Long-Term National Rating at 'AA+(dom)'; Outlook Stable;

--Short-Term National Rating at 'F1+(dom)'

BHD Leon Puesto de Bolsa, S.A.:

--Long-Term National Rating at 'AA+(dom)'; Outlook Stable;

--Short-Term National Rating at 'F1+(dom)'.

Additional information is available on www.fitchratings.com

Applicable Criteria

Global Bank Rating Criteria (pub. 20 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863501

Global Non-Bank Financial Institutions Rating Criteria (pub. 28 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=865351

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1008355

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1008355

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. 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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160701005723/en/

Fitch Ratings
Primary Analyst
Theresa Paiz-Fredel
Senior Director
+1-212-908-0534
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Larisa Arteaga
Director
+1-809-563-2481
or
Committee Chairperson
Gonzalo Alliende
Senior Director
+56 2 2499-3308
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
[email protected]

Source: Fitch Ratings

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