...VR Drives IDRs and National Ratings: Banco de Occidente S.A.'s (Occidente, or the bank) IDRs and national ratings, driven by its VR, reflect its solid capital ratios, low-risk and diversified business model, and stable, albeit moderately concentrated, funding. Fitch also considered the bank's potential profitability challenges within a less benign economic environment, moderate franchise and role as one of Grupo Aval's most important subsidiaries. Solid Capital Ratios: Consistent capital generation and moderate dividend policies underpin Occidente's capital metrics. The bank's Fitch Core Capital (FCC) ratio has declined over the past three years as asset growth exceeded capital formation. Occidente's FCC decreased to 12.68% at December 2015, but this level still exceeded that of its domestic peers. In Fitch's view, Occidente's capital ratios are adequate given its strong loan loss reserves and loan quality, as well as its stable earnings generation. Strong Parent Support: Occidente's business...
