Banco Agricola S.A.

The outlook on Banco Agricola is negative, reflecting an at least one-in-three chance of a downgrade in the next six to 18 months. The negative outlook reflects that a potential deterioration in the country's economy could harm the bank's liquidity. Therefore, if the bank's liquidity worsens because of potential sovereign stress in the next six to 18 months; we could lower the ratings. Additionally, we expect Banco Agricola to maintain its status as a core subsidiary of Bancolombia S.A. y Companias Subordinadas (BB+/Stable/B) because the Salvadoran bank remains an important vehicle for the group's strategy in Central America. We could revise the negative outlook to stable if we did the same on El Salvador's outlook. This could happen if the

...We expect Banco Agricola to maintain its leading position in El Salvador and its solid business diversification by geography, lending segment, and customer. Banco Agricola's leading position in the country is thanks to its broad customer base, which has allowed it to remain resilient to challenging economic and political conditions in El Salvador. We expect that the bank's business stability will continue because of its prominent market position, loyal customer base, and strong management that has ample experience in the Salvadoran banking system. We expect profitability to continue recovering and support internal capital generation in the next 12 months. During 2021, Banco Agricola's revenue rose, supporting profitability and internal capital. Our risk-adjusted capital (RAC) ratio, which we estimate at 6.2% for the next 12-24 months, is supported by robust earnings, solid NIMs and fee income, good efficiency, and lower cost of risk. Banco Agricola will continue benefiting from a large...

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