The amount of the fourth issuance will be up to
KEY RATING DRIVERS
The expected rating assigned to Daycoval's issuance of Letras Financeiras corresponds to Fitch's long-term national rating ('AA(bra)'; Outlook Stable) for the bank and ranks equal with its other senior unsecured debt.
Daycoval's ratings reflect the bank's consistent track record of performance, maintained through different cycles of the local economy, along with higher business diversification and comfortable liquidity and capitalization positions. The bank has recorded consistent profitability, even under stress scenarios, sustained by adequate asset pricing, strong cost control and low funding cost. It continues to adopt prudent liquidity management and adequate asset and liability management strategies that help to mitigate the burden of a less diversified funding base compared to larger peers. Business diversification to payroll deductible loans have allowed the bank to compensate the impact on margins of its more limited risk appetite for SME loans over the last two periods.
Given its current business model, with asset and liability concentrations inherent to its size, including its wholesale funding nature, the potential for an upgrade to Daycoval's ratings is limited.
The ratings could be negatively affected by continued asset quality deterioration which result in pressure on the bank's results (operating income to average asset ratio below 2%) and on capital (Fitch core capital ratio lower than 11%), which could be triggered by larger than expected asset quality deterioration and/or aggressive asset growth or cash dividend policy.
Originated in 1968, Daycoval is controlled by the Dayan family and has been listed on the
Additional information available at 'www.fitchratings.com' or 'www.fitchratings.com.br'
--'Global Financial Institutions Rating Criteria' (
--'National Scale Ratings Criteria' (
National Scale Ratings Criteria
Global Financial Institutions Rating Criteria
Fitch Ratings Brasil Ltda.
Source: Fitch Ratings
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