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Sp 2010 eng Sp 2010 eng Document Transcript

  • August 30, 2010 Research Update: Paraná Banco Ratings Raised To 'BB-/B' From 'B+/B', After Showing Good Performance Through Downcycle Primary Credit Analyst: Ricardo Brito, Sao Paulo (55) 11 3039-9733;ricardo_brito@standardandpoors.com Secondary Contact: Milena Zaniboni, Sao Paulo (55) 11 3039-9739;milena_zaniboni@standardandpoors.com Table Of Contents Overview Rating Action Rationale Outlook Related Criteria And Research Ratings List www.standardandpoors.com/ratingsdirect 1 817814 | 301116491
  • Research Update: Paraná Banco Ratings Raised To 'BB-/B' From 'B+/B', After Showing Good Performance Through Downcycle Overview • Paraná Banco posted solid operating performance during an economic downcycle. • We are raising our ratings on the bank, including raising the counterparty credit ratings to 'BB-/B' from 'B+/B' on the global scale and to 'brA-' from 'brBBB+' on the Brazilian national scale. • The outlook is stable. • Maintaining its current business profile, profitability, and capitalization will be critical to support the ratings. Rating Action On Aug. 30, 2010, Standard & Poor's Ratings Services raised its ratings on Paraná Banco S.A., including raising the counterparty credit ratings to 'BB-/B' from 'B+/B' on the global scale and to 'brA-' from 'brBBB+' on the Brazilian national scale. The outlook is stable. Rationale The upgrade primarily reflects Paraná Banco's solid operating performance over the past two years, during an economic downcycle. We take into account the earnings stability afforded by the bank's payroll-lending business and the insurance business managed by fully owned subsidiary J. Malucelli Seguradora S.A. (national scale: brA-/Stable/--). Very high capital and adequate liquidity management, which we trust offer significant protection during periods of stress, also support the ratings. The severe competition the bank faces somewhat offset these positives. The larger banks in Brazil are currently targeting payroll lending, and this could lead to portfolio growth challenges for Paraná Banco. Paraná Banco's profitability is supported by its ability to generate low-risk, high-margins payroll discount lending and by its lean and efficient structure. Return on adjusted assets (ROAA) for first-six-months 2010 stood at about 3.8%, which we consider good given the bank's risk profile and compared with the average of its major rated peers. The bank registered an efficiency ratio (noninterest expenses to total revenues) of 48% at the same date, which also compares positively with that of its major peers. The bank's capitalization in our view is a supportive factor for the ratings. Standard & Poor’s | RatingsDirect on the Global Credit Portal | August 30, 2010 2 817814 | 301116491
  • Research Update: Paraná Banco Ratings Raised To 'BB-/B' From 'B+/B', After Showing Good Performance Through Downcycle The bank has historically maintained capitalization at very high levels, reflecting management conservatism. As of June 2010, adjusted total equity to adjusted assets was at 26.9%, well above the peer average. We calculate the bank's risk-adjusted capital ratio at a very high 15.5% after diversification adjustments. Liquidity is adequate, with loans accounting for just 69% of deposits plus long-term funding. Asset quality ratios are good, with manageable nonperforming loans (NPLs). The NPL-to-total loans ratio peaked at 4.9% at year-end 2008 and has improved since then to 3.8% in June 2010, with net charge-offs at 1.6% of average loans. These asset quality indicators reflect the nature of payroll discount loans to retirees, pensioners, and civil servants, and proper control on the delay in payment to employees, which we expect the bank will maintain. Paraná Banco benefits from a diversified credit portfolio because its credit operations are aimed at providing small loans to a great number of individuals. Paraná Banco is a niche bank, with adjusted assets of Brazilian reais 2.9 billion as of June 2010. The bank is part of a broader conglomerate owned by the Malucelli family, with operations in different sectors but concentrated in southern Brazil. Outlook The stable outlook reflects our expectation that the bank will be able to maintain its core competencies in the medium term with an adequate financial profile. However, the bank's business profile limits ratings upside. We could revise the outlook to negative or lower the ratings if capitalization worsens significantly or if profitability drops drastically. Related Criteria And Research • Risk-Adjusted Capital Framework For Financial Institutions, April 21, 2009 • Bank Rating Analysis Methodology Profile, March 18, 2004 Ratings List Parana Banco S.A Upgraded; Short-Term Rating Affirmed To From Counterparty Credit Rating BB-/Stable/B B+/Stable/B Senior Unsecured BB- B+ Upgraded To From www.standardandpoors.com/ratingsdirect 3 817814 | 301116491
  • Research Update: Paraná Banco Ratings Raised To 'BB-/B' From 'B+/B', After Showing Good Performance Through Downcycle Parana Banco S.A Counterparty Credit Rating Local Currency brA-/Stable/-- brBBB+/Stable/-- Complete ratings information is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Standard & Poor’s | RatingsDirect on the Global Credit Portal | August 30, 2010 4 817814 | 301116491
  • Copyright © 2010 by Standard & Poor's Financial ,<FONT COLOR="BLUE">Services LLC (S&P)</FONT>, a subsidiary of The McGraw-Hill Companies, No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P's opinions and analyses do not address the suitability of any security. S&P does not act as a fiduciary or an investment advisor. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. S&P may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. www.standardandpoors.com/ratingsdirect 5 817814 | 301116491