'A seasoning of credit portfolios, following high nominal loan growth that has exceeded more than 40% on average over the past three years could also result in a deterioration of Venezuelan banks' credit metrics,' said
Nevertheless, absent a material increase in government intervention or a severe macroeconomic adjustment, bank financial metrics should remain well within the norm of similarly rated peers.
Venezuelan banks have a large, negative mismatch between short-term assets and liabilities, while funding greater than one year is limited. However, this position is manageable under
Weaker profitability and internal capital generation could pressure capital ratios in the short term if growth does not decelerate from current levels.
Asset quality ratios have been stable to improving as nominal gross loan growth, driven by high inflation, has significantly outpaced growth of restructured and impaired loans.
Many banks have been proactively increasing reserves for impaired loans in order to face current macroeconomic imbalances. Given unseasoned loan growth, however, an economic shock could easily reverse asset quality trends.
For more information, a special report titled 'Peer Review: Private Sector Venezuelan Banks' is available on the Fitch Ratings web site at www.fitchratings.com, or by clicking on the link.
Additional information is available on www.fitchratings.com
--'Global Financial Institutions Rating Criteria' (
--'National Scale Rating Criteria' (
--'2014 Outlook: Andean Banks' (
2014 Outlook. Andean Banks (
National Scale Ratings Criteria
Global Financial Institutions Rating Criteria
Source: Fitch Ratings
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