Fitch: Outlook for Ecuadorian Banks Remains Negative

NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: Peer Review: Ecuadorian Banks

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873260

Ecuadorian banks remain vulnerable to the country's deteriorating operating environment, including weakening U.S. dollar liquidity, diminished consumer confidence and oil production challenges, says Fitch Ratings in a new report. The potential for adverse regulatory actions also raises the risk that the banking system's growth prospects, profitability and capitalization will be negatively affected.

"Even though the government has no short-term regulatory plans, the risk of intervention in the medium term remains elevated," says Larisa Arteaga, Director. "Lack of a specific time frame leaves the door open for measures that could end up harming the overall banking system."

Ecuador's worsening economy hit loan growth in the first half of the year, which, along with cyclical changes, worsened asset quality. However non-performing loan ratios at the Ecuadorian banks in Fitch's portfolio still compare favorably with those of similarly rated international peers as a result of the stricter local regulatory definitions of impaired loans.

In October 2015, Fitch affirmed the ratings of Pichincha and Produbanco at 'B'/Outlook Stable. The Issuer Default Ratings of both banks have limited upgrade potential in the short term, given the challenging operating environment and the government's control over the regulatory framework, which impact the banks' performance.

The full report, 'Peer Review: Ecuadorian Banks,' is available at www.fitchratings.com

Additional information is available at '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

Related Research

2016 Outlook: Government Intervention Weighs on Argentine, Ecuadorian and Venezuelan Banks

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871999

Ecuador

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=872125

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View source version on businesswire.com: http://www.businesswire.com/news/home/20151117006687/en/

Fitch Ratings
Theresa Paiz Fredel
Senior Director
+1-212-908-0534
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Larisa Arteaga
Director
+1-809-563-2481
or
Marcela Galicia
Director
+503 2516-6616
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
[email protected]

Source: Fitch Ratings

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