KEY RATINGS DRIVERS
GNB's local and foreign currency IDRs and its national ratings are driven by its
The ratings also consider GNB's robust asset quality (30-day past-due loan [PDL] ratio stood at 1.87% at
GNB's performance during 2013 and 2014 is affected by its rapid asset growth that has yet to translate into revenues and profitability. The bank's newly acquired subsidiaries show positive improvement signs but lag their parent's performance. While progress is likely into 2015, short-term performance and capitalization metrics appear to be at a trough and should remain close to historic minimums during most of 2014 then recover gradually. GNB's future performance is expected to benefit from slower growth and cost control while the integration and consolidation of GNB's new subsidiaries should result in higher profitability during 2015 with ROAA gradually inching towards 1%.
Asset quality has slightly deteriorated but remains among the best in
Fitch core capital ratios are expected to decline to the 9%-10% range by year end as the bank merges with Banco GNB Colombia (former HSBC
SUPPORT RATING AND SRF
GNB's support rating and support rating floor reflect the bank's somewhat modest systemic importance and Fitch's perception that the Colombian government would probably support GNB if needed.
GNB's subordinated debt is rated one notch below the bank's IDR. These bonds lack equity-like features that would earn it equity credit following Fitch's criteria. The notching reflects one notch for higher expected losses in case of liquidation but no additional notching for non-performance.
GNB's ratings could be negatively affected if GNB's (or one of its newly acquired subsidiaries') performance declines more than expected, in particular, if its ROAA declines below 0.5% or if its capital declines (
On the other hand, given that the bank is just starting to integrate its new acquisitions and will continue to show relatively weak profitability and capital metrics in the short run, there is limited upside potential for its ratings.
SUPPORT RATING AND SRF
GNB's support and support floor ratings would change if Fitch's assessment of the Government's ability and willingness to support the bank change.
The ratings of GNB's subordinated debt will move in line with the bank's IDR.
Fitch has affirmed GNB's ratings as follows:
--Long-term foreign currency IDR at 'BB+'; Outlook Stable;
--Short-term foreign currency at IDR 'B';
--Long-term local currency IDR at 'BB+'; Outlook Stable;
--Short-term local currency IDR at 'B';
--Viability rating at 'bb+';
--Support Rating at '4';
--Support Floor at 'B+';
--Senior unsecured notes at 'BB+';
--Subordinated notes at 'BB';
--National scale long-term rating at 'AA+(col)'; Outlook Stable;
--National scale short-term rating at 'F1+(col)'.
Additional information is available at 'www.fitchratings.com'.
--'Global Financial Institutions Rating Criteria' (
--'Assessing and Rating Bank Subordinated and Hybrid Securities' (
Source: Fitch Ratings
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