Fitch Upgrades Credomatic International Corporation's IDR to 'BBB+'; Outlook Stable

NEW YORK & SAN SALVADOR, El Salvador--()--Fitch Ratings has upgraded Credomatic International Corporation's (CIC) long-term Issuer Default Rating (IDR) to 'BBB+' from 'BBB', following the recent upgrade of Banco de Bogota, S.A. IDRs and Viability Ratings (VR). (For additional information see 'Fitch Upgrades Banco de Bogota to 'BBB+'; Outlook Stable', dated July 21 2014 and available at www.fitchratings.com.)

Fitch has also affirmed CIC's Support Rating at '2'. The Rating Outlook is Stable. A full list of CIC's ratings follows at the end of this press release.

KEY RATING DRIVERS

The upgrade of CIC's IDR reflects the high probability of support that Fitch believes the entity would receive from its parent Banco de Bogota, should it be needed. CIC is considered a 'core' subsidiary of its parent, based on its meaningful size (23.3% of Banco de Bogota's consolidated assets as of December 2013), its important contribution to consolidated net income (37%), and its key role in the group's regional strategy. CIC is a bank holding company of six self-standing banks as well as credit card companies domiciled in Central America operating under a common brand in the region. As such, the overall size of CIC does not limit Banco de Bogota's capacity to provide support should it be required since the correlation between its operating subsidiaries is not high. As a reference, the subsidiary with the largest size represents just 8% of Banco de Bogota's assets.

The Stable Outlook reflects that CIC's IDR will likely remain unchanged over the foreseeable future assuming that Banco de Bogota keeps its current risk profile.

CIC is a company incorporated in the British Virgin Islands and groups BAC/Credomatic's credit card businesses and commercial banking operations in each Central American country with the exception of Panama. BAC/Credomatic is the largest financial group in Central America. As of December 2013, CIC has USD12.2 billion in assets and is a leader in the credit card business, while having a dominant market share in the acquiring and issuing businesses.

CIC exhibits a solid financial performance explained by the performance of its operating subsidiaries. The entity's bank subsidiaries are consistently among the most profitable banks in each country, driven by a well-developed revenue structure that balances interest income and fees and commissions, good operating efficiency, and low loan impairment charges.

BAC/Credomatic's activities are robustly funded on a standalone basis by country and legal entities. The group has developed an adequate customer deposits base that is complemented by an ample ability to obtain funding from various sources. Despite the former, all the entities benefit from an integrated management in terms of policies, controls and also share the same commercial branding in the region.

CIC's capitalization declined after the acquisition of Grupo Financiero Reformador (Guatemala) in December 2013. Total assets grew 34.5% which exceeded the entity's internal capital generation rates. CIC consolidated tangible common equity/tangible assets was 8.3% as of December 2013, while the capital position of each of the operating banks is sound and ranges from 11.5% to 13.7% as of December 2013. Despite the aforementioned reduction on its capital levels, CIC reasonable dividend payments and high internal capital generation capacity bodes well to recover its capitalization in the short and medium term.

Debt levels at the holding company (CIC) are relatively high (double leverage of 149%) but is compensated by good debt service coverage ratios and the possible support from Banco de Bogota, it should be required.

RATING SENSITIVITIES

Changes in CIC's IDR and Support Rating would reflect changes in Banco de Bogota's ability and/or propensity to provide support, in case of need. The IDRs would move in line with Banco de Bogota's rating unless the correlation of CIC subsidiaries increases, which may result in a differentiation of the rating of CIC compared to Banco de Bogota.

Fitch has taken the following rating actions:

Credomatic International Corporation:

--Foreign currency long-term IDR upgraded to 'BBB+' from 'BBB'; Outlook Stable;

--Foreign currency short-term IDR affirmed at 'F2';

--Support rating affirmed at '2'.

CIC subsidiaries' national ratings were unaffected by these actions.

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

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2014);

--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012);

--'2014 Outlook: Central America and the Dominican Republic' (Dec. 16, 2013).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

2014 Outlook: Central America and the Dominican Republic

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=725825

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=841735

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Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar, +1 212-908-0396
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Rolando Martinez, +503-2516-6619
Director
or
Committee Chairperson
Alejandro Garcia, +52 (81) 8399-9146
Managing Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar, +1 212-908-0396
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Rolando Martinez, +503-2516-6619
Director
or
Committee Chairperson
Alejandro Garcia, +52 (81) 8399-9146
Managing Director
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com