Fitch revises outlook of IBEC’s investment grade rating to Positive
On March 11, 2020 Fitch Ratings-London has revised the Outlook on International Bank for Economic Co-operation (IBEC), namely: Long-Term Issuer Default Rating (IDR) to Positive from Stable and affirmed the IDR at “BBB-“. IBEC’s Short-Term IDR has been affirmed at “F3”.
In its official press release, Fitch Ratings highlighted that a revision of their assessment is the result of ongoing improvement in the bank’s risk profile driven by the continuing transformation of its organizational structure and business operations. Credit risk, concentration metrics and the risk management framework have all improved since the last review and Fitch expects further improvements going forward.
IBEC’s ratings are driven by its intrinsic features, with solvency and liquidity assessed at “bbb+” and “a-“, respectively. IBEC’s solvency assessment is underpinned by the bank’s “excellent” capitalization metrics.
In line with the bank’s high growth lending strategy, Fitch expects IBEC’s equity-to-adjusted-assets-and-guarantees ratio and the Usable Capital / Risk Weighted Assets ratio, both of which are levels that would remain commensurate with an “excellent” assessment under Fitch’s criteria.
Fitch improves the credit risk assessment of the bank to “moderate”, as a result of the successful completion of the first phase of its internal rating model, which has been in development for several years. The improvement reflects an adjustment to the valuation method and a changed strategy to focus the Bank's lending activity on higher rated counterparties (in the "BB" category).
Fitch Ratings noted that developments that may lead to positive rating action include the following: continued improvement in IBEC’s risk management function, progressive building and effective credit management of the loan and treasury portfolios, evolution of IBEC’s income generation model towards banking operations and away from less sustainable non-banking income sources.
The main expectation of Fitch for IBEC is that the Bank will continue to improve its operational capabilities and control in accordance with the objectives set by IBEC's current strategy.