...Divergent Outlooks: Colombian and Peruvian banks have adjusted to slower economic growth. While Fitch Ratings anticipates some deterioration in asset quality and financial performance for these systems in 2016, this should not affect either rating or sector outlooks. Conversely, Fitch's negative sector outlooks for Ecuador and Venezuela reflect macroeconomic risks and high state intervention, which could negatively affect the banks' performance and risk profiles in the near term. Varying Capital Trends: With the exception of Venezuela, banks in the region are expected to maintain adequate cushions against unexpected losses. In Colombia, Ecuador and Peru, a stable rate of internal capital generation should continue to outpace bank asset growth, supporting stable capital ratios in 2016. In Venezuela, by contrast, high inflation-led asset growth will continue to erode bank capital during this same period. Divergent Regulation: Regulation in Colombia and Peru has progressed toward alignment...
