...Prudent Stance on Risk: Caja Laboral Popular Cooperativa de Credito's (Laboral Kutxa) IDRs are driven by its standalone credit profile, as captured by its Viability Rating (VR). The VR reflects the bank's prudent stance towards risk, improved and better-than-sector-average asset quality, sound loss-absorption buffers, adequate funding structure and comfortable liquidity position. The VR also considers Laboral Kutxa's modest profitability, exposure to legacy problem real estate assets and geographical concentration in its home region. Lower NPLs Drive Improvements: Better economic conditions continued to support asset- quality improvements in 1H15. The NPL ratio declined to 7.9% at end-1H15 (9.7% including foreclosed assets) from 8.4% at end-2014 (10.3%). However, Laboral Kutxa remains exposed to legacy real estate development problem assets, which accounted for 4.9% of gross loans and foreclosed assets at end-1H15. NPL reserve coverage was adequate at 60% at end-1H15, and together with...
