Banco Fibra S.A.

In addition, given that the majority of Fibra's funding comes from deposits, the bank's stable funding ratio remained comfortable at 104% as of December 2022. Moreover, Fibra's prudent approach to liquidity is reflected in its broad liquid assets to short-term wholesale funding of 1.6x for the same period. The positive outlook reflects our view that the bank's revamped strategy could lead to an upgrade in the next 12 months. In our view, Fibra should keep benefiting from the momentum of financing backed by receivables, while seeking to diversify revenue sources and further improve its financial performance without denting its asset quality. Moreover, we expect the bank's Basel III capital ratio to remain at least 100 basis points above the minimum

...The ratings on Banco Fibra S.A. are based on its narrow business profile and volatile profitability, which is gradually improving after years of strategic repositioning. In the past few years, Fibra has turned around its operations, shifting toward less risky business segments and strengthening earnings. However, tightening credit conditions and lower margins due to rising basic interest rates since 2021 have resulted in weaker profitability. For 2023, we expect Fibra's portfolio growth to remain sluggish, but expect its profitability to slowly recover amid increasing margins as the bank attempts to reprice its loans while reducing funding costs amid lower interest rates. The bank has been improving its underwriting standards, and consequently, the risk profile of its portfolio. After adopting tighter underwriting standards and a significant change in its client profile, Fibra's credit losses and nonperforming loans (NPLs) plummeted to 0.4% at the end of 2022 from an average of 3.1% between...

Full Report