Caixa Economica Federal

The stable outlook reflects the rating outlook on Brazil (BB/Stable/B), and we expect the ratings on Caixa to move in tandem with those on the sovereign. On a stand-alone basis, we expect Caixa to maintain manageable asset quality metrics (given its low-risk portfolio mix) and keep its results-oriented strategy. However, despite its 'bb' stand-alone credit profile (SACP), Caixa's prominent role in economic and public policy means that we equalize the ratings and default risk with those on the sovereign. We would likely raise the ratings on Caixa following a similar action on the sovereign ratings. We would likely lower the ratings on Caixa following a similar action on the sovereign ratings. We classify the banking sector of Brazil in group

...In our view, Caixa Economica Federal continues to be a key government-related entity (GRE) for the sovereign because of its importance in Brazil's mortgage lending industry and its social role. Therefore, our ratings on the bank are the same as those on the sovereign. Moreover, we think the bank has a prominent role in implementing the Brazilian government's social policies by acting as the government's main payment provider. As a result, we think Caixa continues to play a critical role for the government--and for the government's economic strategy--as one of the most important GREs in the country. Profitability bounced back in 2023 because of credit growth and net interest margin recovery. We expect similar performance in 2024. Caixa's lending growth was 10.6% in 2023, propelled by residential mortgages and agribusiness. The bank had stronger recurring earnings than in previous years (8.5% return on equity) because of higher net interest margins as a consequence of its repricing polices...

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