Abanca Corporacion Bancaria S.A

Large franchise in Galicia, which provides a sizable and stable retail funding base. Better asset quality metrics than peers'. Enhanced capitalization on the back of increased retained earnings and hybrids issued. Regional geographic concentration. Weak--although improving--operating profitability and efficiency. Large deferred tax asset stock. The positive outlook on Abanca Corporacion Bancaria S.A reflects the possibility we could raise our ratings over the next 12 months. This could happen if the bank keeps improving its efficiency and its operating profitability to levels closer to its domestic peers, and if we consider this is not due to an excessive risk appetite. The positive outlook also assumes that Abanca will maintain better-than-domestic-peers' asset quality metrics, with nonperforming assets (NPAs) falling to about 4.5%

...Outlook: Positive The positive outlook on Abanca Corporacion Bancaria S.A reflects the possibility we could raise our ratings over the next 12 months. This could happen if the bank keeps improving its efficiency and its operating profitability to levels closer to its domestic peers, and if we consider this is not due to an excessive risk appetite. The positive outlook also assumes that Abanca will maintain better-than-domestic-peers' asset quality metrics, with nonperforming assets (NPAs) falling to about 4.5% of gross loans by end-2020, while maintaining adequate coverage levels. In addition, we anticipate that the bank will remain adequately capitalized, with a risk-adjusted capital (RAC) ratio of 7.75%-8.25% by end-2020. This includes Banco Caixa Geral in Spain, which we expect will be integrated smoothly in the next few months. Our ratings do not incorporate the potential impact from any possible acquisition on Abanca's business and financial profile. We note that the bank remains open...

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