Banco do Brasil S.A #BB-/B# Ratings Affirmed On Recovered Profitability, Outlook Remains Stable

Stocks and Financial Services Press Releases Thursday April 26, 2018 09:46
SAO PAULO--26 Apr--S&P Global Ratings

SAO PAULO (S&P Global Ratings) April 25, 2018--S&P Global Ratings affirmed its 'BB-' long-term global scale local and foreign currency ratings and our 'B' short-term foreign currency rating on Banco do Brasil S.A. (BdB). We're also affirming all debt ratings on BdB and our national scale 'brAA-' rating on Ativos S.A. Securitizadora de Creditos Financeiros, a core subsidiary. The outlook is stable. In addition, we assigned our 'B' short-term local currency rating on BdB.

At the same time, we're improving the bank's stand-alone credit profile (SACP) to 'bbb' from 'bbb-'. The very high likelihood of support from the government to the bank remains unchanged.

We're affirming BdB's ratings following the bank's recovery of its profitability after posting weaker results in 2016. Despite no credit growth in 2017, BdB improved its NIM as funding costs continue to decrease, helping it maintain stable operating revenues. Moreover, the bank went through a significant organizational restructure aimed at improving its efficiency and cost control. Finally, a more favorable economy enabled the bank to improve its asset quality metrics, requiring lower credit loss provisions and boosting its earnings. As a result, BdB established stronger internal capital generation than we anticipated in our previous forecast while deleveraging its portfolio, leading us to improve our view of its capital position.

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