de C.V., Sociedad Financiera de Objeto Mתltiple, Entidad Regulada's
(Santander Consumo) proposed short-term commercial paper program for up
to MXN5 billion. At the same time,
National Scale debt rating of MX-1 to the proposed issuance. The outlook
on the assigned ratings is stable.
ba3 to Santander Consumo.
The following ratings were assigned to Santander Consumo's proposed
short-term commercial paper program for up to MXN5 billion, with a stable
Short-term global local currency senior debt rating: Prime-2
Short-term Mexican National Scale senior debt rating: MX-1
The debt ratings for Santander Consumo are based on
full support from
A3/Prime-2 stable, C-/baa1 positive) to its consumer subsidiary in line
with its 99.99% ownership, full reliance on parent bank funding, high
degree of integration into its parent bank's business lines, customer and
product strategy, and importance to the bank's consumer franchise.
Santander Consumo is an inextricable line of business of Santander Mexico.
In addition to funding, the finance company depends on its parent bank
for infrastructure, staff, risk management and its customer base. In
turn, Santander Consumo's MXN55.1 billion portfolio of credit card and
general consumer loans is an integral part of Santander Mexico's product
strategy and represents a substantial 78.7% of its consolidated consumer
lending book, as of
consumer finance bank in the country.
standalone BCA of ba3 reflects its dependence on its parent coupled with
its monoline focus as well as strong capitalization and profitability."
The finance company's nonperforming loan ratio of 3.9% is not
excessively high despite its focus on a higher risk product such as
credit cards. In addition, Santander Consumo maintains ample loan loss
reserves and strong capital levels, as a second line of defense against
While it records high write-offs, Santander Consumo is comfortably able
to absorb these as a result of an ample net interest margin (NIM); as of
Santander Consumo's NIM benefits from the high interest rates charged on
credit cards and the cheap financing offered by its parent-bank. The
ample NIM supports strong profitability, as exhibited by net income as a
percent of total managed assets of 6.4%, as of
Funding from Santander Mexico currently represents 70.4% of the finance
company's total assets, as of
Consumo's market funding to gradually increase beginning with the current
issuance given restrictions on the parent bank's ability to provide
additional funding directly due to regulatory limits for related party
lending. In turn, this could drive higher funding costs in this portion
of funding and reduce profitability, according to the rating agency.
The principal methodology used in this rating was Finance Company Global
Ratings Methodology published in
Policy page on www.moodys.com.mx for a copy of this methodology.
measures of creditworthiness among debt issues and issuers within a
country, enabling market participants to better differentiate relative
risks. NSRs differ from
are not globally comparable with the full universe of
entities, but only with NSRs for other rated debt issues and issuers
within the same country. NSRs are designated by a ".nn" country modifier
signifying the relevant country, as in ".mx" for
entitled "Mapping Moody's National Scale Credit Ratings to Global Scale
The period of time covered in the financial information used to determine
Santander Consumo's rating is between
The sources and items of information used to determine the rating include
2014 interim financial statements (source:
financial statements); year-end 2011, 2012 and 2013 audited financial
Santander Consumo is domiciled in
MXN56.2 billion in assets, MXN55.1 billion in gross loans, MXN10.2
billion in shareholders' equity and MXN882.5 million in net income
(source: Issuers' financial statements), as of
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
OCTOBER 31, 2014
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