...Support-Driven IDRs: The Issuer Default Ratings (IDRs), Support Rating (SR) and Support Rating Floor (SRF) of Caixa Economica Montepio Geral (Montepio) reflect Fitch Ratings' belief that there is a moderate probability of state support, if needed, because of the bank's systemic importance. The `b+' Viability Rating (VR), which reflects standalone strength, reflects the fragile profitability and the weak asset quality but also the improving funding profile and adequate capital. Weak Profitability: The profitability of Montepio's core banking business is still weak reflecting modest non-interest income generation, a high proportion of low-margin residential mortgages, historically low interest rates and recent deleveraging. Fitch expects the bank's earnings generation ability to be supported by the successful diversification of the loan book into more profitable SMEs loans ¡ which accounted for 88% of total new loans extended in 1H14 - and by a focus on reducing funding costs. Asset Quality...
