Fitch Completes Peer Review for Large Dominican Banks

OREANDA-NEWS. Fitch Ratings has completed its peer review for one state-owned bank and two large banks in the Dominican Republic. As a result, Fitch affirmed the banks' ratings as detailed at the end of this release.

The three banks included in this peer review are Banco de Reservas de la Republica Dominicana, Banco de Servicios Multiples (BANRESERVAS); Banco Popular Dominicano (BPD); and Banco Multiple BHD Leon S.A. (BHDL). These banks are among the largest in their market, have a universal bank profile and assets between USD7.9 billion and USD4.4 billion as of March 2015, with operations primarily in the Dominican Republic. BANRESERVAS' Issuer Default Ratings (IDRs) are driven by the support from the Dominican government. The IDRs of BHDL are driven by its Viability Rating (VR), or stand-alone intrinsic financial strengths, while limited by the operating environment.

Asset quality at all the three banks covered in this review remains sound or has improved, supported not only by sustained growth and a benign economic environment but also by significant loan restructurings. Asset quality at Dominican banks is now stronger than international peers (emerging market commercial/universal banks with a 'b' category VR). Fitch believes that, given favorable economic and operating conditions, this trend should be sustained in 2015.

While BHDL's and BPD's profitability remained stable during 2014, lower credit costs due to advances in resolving problem loans led to higher profitability at BANRESERVAS. Fitch believes these banks' performance will remain solid over the remainder of 2015 as a result of sound loan portfolio growth, improvements in loan quality, and a gradual increase in margins during the second half of the year.

When capitalization at all these banks is viewed in conjunction with their reserve coverage levels, BHDL exhibited the strongest loss-absorbing capacity as of December 2014, while BANRESERVAS had the weakest among large Dominican banks. Fitch expects Dominican banks' capitalization ratios to be stable or improve in 2015.

Fitch published the main findings of this peer review completed in June in a report 'Peer Review: Dominican Banks', which is available at www.fitchratings.com.

For further details on the particular key rating factors and rating sensitivities of each of these entities, please view individual rating action commentaries, available in Fitch's website at www.fitchratings.com.

Following completion of the peer review on June 26, 2015, Fitch affirmed the following international and national ratings:

BANRESERVAS:
--Foreign and local currency IDRs at 'B+'; Outlook Stable;
--Short-term foreign and local currency IDRs at 'B';
--Viability Rating at 'b';
--Support Rating at '4';
--Support Floor at 'B';
--Long-term subordinated notes at 'B'
--National long-term rating at 'AA+(dom)'; Outlook Stable;
--National short-term rating at 'F1+(dom)'.

BPD
--Long-term National rating at 'AA+(dom)'; Outlook Stable;
--Short-term National rating at 'F1+(dom)';
--Long-term National subordinated debt at 'AA(dom)'.

BHDL
--Foreign and local currency long-term IDR at 'B+'; Outlook Stable;
--Foreign and local currency short term IDR at 'B';
--Viability Rating at 'b+';
--Support at '5';
--Support Floor at 'NF';
--Long-term National rating at 'AA+(dom)'; Outlook Stable;
--Short-term National rating at 'F1+(dom)';
--Long-term National subordinated debt at 'AA(dom)'.