Fitch Affirms Banco Safra S.A. & Safra Leasing S.A.

NEW YORK & SAO PAULO--()--Fitch Ratings has affirmed the ratings of Banco Safra S.A. and Safra Leasing S.A.- Arrendamento Mercantil as follows:

Banco Safra S.A.

--Foreign currency long-term Issuer Default Rating (IDR) at 'BBB-'; Outlook Stable;

--Foreign currency short-term IDR at 'F3';

--Local currency long-term IDR at 'BBB-'; Outlook Stable;

--Local currency short-term IDR at 'F3';

--Individual rating at 'C';

--Viability rating at 'bbb-'

--Support rating at '4';

--Support rating floor at 'B+';

--National long-term rating at 'AA+(bra)'; Outlook Stable;

--National short-term rating at 'F1+(bra)'.

Banco Safra Senior notes due 2016

--Long-term Foreign Currency rating at 'BBB-(emr)'.

Banco Safra Senior notes due 2017

--Long-term Foreign Currency rating at 'BBB-(emr)'.

Safra Leasing S.A. Arrendamento Mercantil

--National long-term rating at 'AA+(bra)'; Outlook Stable;

--National short-term rating at 'F1+(bra)'.

Safra Leasing S.A. Arrendamento Mercantil - 12th, 13th, 14th and 15th Debenture Issuances

--National long-term rating at 'AA(bra)'.

Safra's rating may be upgraded due to a higher diversification of its revenue stream and a more diluted funding source; making the bank more flexible to sudden changes on market conditions. In the other hand, a deterioration of its asset quality and profitability that hinders its capital base, would have negative rating implications.

Safra's ratings reflect the bank's proven agility and ability to manage risks and adapt its balance sheet during periods of economic volatility, its consistent performance, conservative practices in managing credit exposures, and good controls on the collateral received from its borrowers. The ratings also consider its relative dependence on institutional and large corporate funding.

Safra has continued to grow its balance sheet since the crisis in 2008. With continuous focus on its core business of providing credit facilities and services to SMEs and corporate clients, the bank recorded a 33% growth in credit during 2010 followed by a cautious 4% growth during the 1Q'11. Despite Brazil's continued favorable economic scenario, Fitch expects that Safra will continue to grow at moderate pace and in a controlled fashion in 2011 given the recent economic tightening cycle. Returns may be lower due to continuous spread competition and the strong liquidity of local credit markets.

With an asset quality better than its peers, Safra continued its year-on-year trend of improved asset quality, attesting it strong expertise in credit origination with middle-market companies.

While the total regulatory capital rose to 15.9% as of March 31, 2011, Fitch core capital was 12%. Given the very good track record in terms of asset quality and profitability, even in time of stress, Safra's capital base is considered adequate even though its business model is relatively more concentrated than other similarly rated universal banks. Also, the bank as a precautionary measure manages ample liquidity levels, while its deposits normally fund the totality of its loans.

Safra is 99.9% controlled by Joseph Safra and his family and was the sixth largest privately owned bank in Brazil in terms of total assets as of December 2010.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria', dated Aug. 16, 2010;

--'Finance And Leasing Companies Criteria', dated Dec. 13, 2010.

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.

Contacts

Fitch Ratings
Cindy Stoller, +1-212-908-0526
Media Relations, New York
cindy.stoller@fitchratings.com
or
Primary Analyst:
Robert Stoll, +1-212-908-9155
Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Edgard Dias, +55-11-4503-2600
Associate Director
or
Committee Chairperson:
Franklin Santarelli, +1-212-908-0739
Managing Director

Sharing

Contacts

Fitch Ratings
Cindy Stoller, +1-212-908-0526
Media Relations, New York
cindy.stoller@fitchratings.com
or
Primary Analyst:
Robert Stoll, +1-212-908-9155
Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Edgard Dias, +55-11-4503-2600
Associate Director
or
Committee Chairperson:
Franklin Santarelli, +1-212-908-0739
Managing Director