...Leading Regional Franchise: Kutxabank S.A.s IDRs are driven by its standalone creditworthiness, as captured in the Viability Rating (VR). The VR reflects the banks leadership in the Basque Country, robust capitalisation, declining risk appetite (a result of the planned divestment of equity investments), well-balanced funding mix and adequate liquidity position. The VR also factors in the pressure on Kutxabanks profitability and asset quality -- although these are set to stabilise -- and still high single-name risk concentration. Solid Capitalisation: At end-1H14 Kutxabanks Fitchs core capital (FCC) and leverage ratios were 12.5% and 8.3%, respectively. At this date the bank reported a Fully-loaded Basel III capital ratio of 12.4%. Further risk-weighted asset reduction, together with retained earnings, will keep the banks capital ratios high and in turn support its overall credit risk profile. Divesting Equities Reduces Risk: Kutxabanks portfolio of equity stakes is relatively large, accounting...
