...Support Drives Ratings: Banca Nazionale del Lavoro S.P.A.'s (BNL) Issuer Default Ratings (IDRs) and Support Rating (SR) reflect institutional support from its parent, BNP Paribas S.A. (BNPP, A+/Stable). This is because Fitch Ratings views BNL as core to BNPP's strategy and Italy to be an important market for the group. One-Notch Cap Above Sovereign: BNL's IDRs are capped at one notch above Italy's sovereign rating to reflect Fitch's view that BNL's ability to service its obligations is vulnerable to restrictions if Italy's operating environment materially worsens. In this scenario, BNL's financial profile may negatively affect the parent group's financial profile and ultimately potentially reduce BNPP's propensity to support its Italian subsidiary. Weak but Improving Asset Quality: In 2018, BNL reduced its stock of impaired loans by nearly 20% owing to disposals and write-offs, but also higher recovery rates and lower defaults. Despite having improved, its impaired loan ratio of around...
