...IDRs Reflect Standalone Profile: Caixa Economica Montepio Geral's IDRs are aligned to its Viability Rating (VR). The ratings reflect the bank's fragile and volatile profitability and weak asset quality. The ratings also reflect just adequate capitalisation and stronger loan-loss reserves than in the bank's recent past. Weak Profitability: The profitability of Montepio's core banking business remains fragile. The high proportion of low-margin residential mortgages, low interest rates alongside recent loan book deleveraging and modest non-interest income generation have been hampering a return to stable and structural profitability. Positively, Montepio is diversifying into the more profitable SME sector, and pressure from provisioning costs should reduce in 4Q15-2016. Very High Capital at Risk: Montepio's capital is just acceptable and Fitch Ratings believes it remains exposed to unreserved problematic assets, which are above 150% of capital. The bank managed to raise new capital in 2015,...
