Promerica Financial Corp.

The stable outlook on PFC for the next 12 months reflects our expectation that it will maintain its broad geographic diversification and large market share in the countries where it operates. Additionally, we expect the bank to keep a projected RAC ratio of about 4.1% for the next two years, while it maintains manageable asset quality metrics and its credit losses to fall during the same period. We could lower our rating on PFC if its double leverage increases above 120% during the next 12 months, which would reflect a greater likelihood of lower dividends from its subsidiaries. Additionally, we could lower the rating if our projected RAC ratio drops below 3% or if the group's asset quality deteriorates, resulting

...Business stability despite our expectation of Latin American economies shifting into low-trend growth by the end of this year and into 2023. Despite more challenging external dynamics that weaken exports in the region, along with a waning confidence taking a toll on domestic demand, we expect PFC's market share, diversified and stable revenue sources to support business stability for 2022 and 2023. We also expect operating revenue to increase about 10%, while loan portfolio to expand about 11% for the next 12-24 months. We expect PFC's steady credit growth and lower provisioning to continue boosting profitability in 2022-2023. PFC bolstered its provisions to absorb the potential damage to the credit quality of its loan portfolio in 2020. Nonetheless, we believe pressure on the group diminished, in terms of provisions, thanks to the resilience of its loan portfolio and despite the heightened economic risks in the countries where PFC operates. We consider that the double-digit lending...

Full Report