Grupo Cooperativo Cajamar

The stable outlook indicates that we expect GCC will continue improving its operating profitability and efficiency over the next 12-18 months, on the back of higher interest rates and lower credit provisions. It also indicates that we expect the group will preserve its improved asset quality and capitalization, with a RAC ratio of 9.3%-9.8% by end-2024. We could lower the ratings on core subsidiaries BCC and Cajamar if GCC's earnings capacity and operating efficiency deviated from our base-case expectations, increasing the gap to peers again, or if its asset quality unexpectedly weakened. We could raise the ratings if GCC's capital strengthened further, with our RAC ratio sustainably exceeding 10%, and if the group improved its asset quality and continuously enhanced

... we have raised our ratings on Grupo Cooperativo Cajamar (GCC). We anticipate GCC will continue to improve its earnings capacity and efficiency through 2024, supported by high interest rates and cost savings from the previous restructuring. It will thereby reduce the gap to higher-rated peers. The strengthening of its earnings capacity and efficiency will be particularly noticeable in 2024, when the group's return on equity (ROE) will reach about 8.3%-8.8%, compared with 2.2% in 2022 and 2.9% in pre-pandemic 2019. Equally, the bank's actions to reduce its employee network during 2023 will subsequently bring additional efficiency gains. Therefore, we believe the group should close the gap to peers, with its cost-to-income ratio reducing to 53% in 2024, compared with 67% at end-2022....

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