KEY RATING DRIVERS
ICQB's IDR reflects the operating subsidiaries' risk profiles, which operate as captive financial companies related to GrupoQ's auto dealers in
Double leverage at the holding company improved in 2013 to a lower 105% (2012:115%) and is expected to remain at manageable levels. Fitch expects that the group's capital position will remain at a comfortable level over the medium term. In Fitch's opinion, ICQB's subsidiaries will maintain their capacity to pay dividends and stream liquidity to the holding company, if needed.
Asset quality is sound across all operations. Past due loans to total loans ratios are likely to remain manageable. Reserves coverage, although improved, compares below banking peers and regulated operations. Consolidated asset quality reflects a portfolio well-diversified by country and by individual borrower. Asset quality also benefits the group's adequate underwriting standards, a well-structured and effective collection process, and deep knowledge of the product that allows the effective management and resale of repossessed vehicles.
ICQB's consolidating subsidiaries benefit from its parent strong franchise and from the popularity of its auto brands in
Fitch believes the financial flexibility of the operation has improved. With a larger and more diversified number of fund providers, the subsidiaries' capacity to control funding costs under challenging market conditions has increased. Such capacity is still limited by their small size and by the significant percentage of encumbered assets. Tenure mismatches at the subsidiaries' level have improved with the longer term, and more diversified funding that has been negotiated; however, there is room for further improvement.
The Stable Outlook reflects that operating performance and asset quality metrics are likely to remain stable at the subsidiaries level. Changes in the subsidiaries' financial, funding and liquidity profiles could affect ICBQ's ratings.
Fitch has affirmed ICBQ's ratings as follows:
--Long-term IDR at 'B'; Outlook Stable;
--Short-term IDR at 'B';
--Long-term senior unsecured bonds at 'B'.
Additional information is available on www.fitchratings.com.
--'Global Financial Institutions Rating Criteria' (
--'Rating FI Subsidiaries and Holding Companies' (
Global Financial Institutions Rating Criteria
Rating FI Subsidiaries and Holding Companies
Source: Fitch Ratings
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