RCI Banque

The stable outlook on RCI incorporates our view that the bank's financial risk profile will remain strong, with steady risk-adjusted profitability and continued conservative capital management over the next two years. Furthermore, a downgrade to Renault would not automatically entail a similar rating action on RCI. We could downgrade the bank's if Renault's creditworthiness comes under further material pressure and RCI is unable to maintain its strong financial risk profile. In particular, we could consider a downgrade if the bank's capitalization is no longer a strength, with risk-adjusted capital (RAC) falling sustainably below 10%, or if contagion risks from Renault start affecting RCI's access to debt markets or cost of funding. An upgrade could happen only if Renault's creditworthiness doesn't

...RCI's profitability remains strong despite the impact of the pandemic and the weak auto cycle. The bank has strong fundamentals, with one of the lowest cost-to-income ratios of 30% in 2020, and achieved a return on average common equity (ROAE) of 13.22% in 2020, one of the highest among auto-captive peers. S&P Global Ratings sees the bank's high dependence on the wholesale funding as a relative weakness compared to large and diversified banks. The dependence comes despite an increase in deposit funding. This is in line with most consumer finance entities we rate in Europe. The bank is fully owned by Renault S.A. and does not benefit in case of funding from any banking owners, as is the case with peers. RCI is geographically diversified, but its business model is concentrated. The starting point for assigning our rating on the bank is the '###' anchor, which is lower than that on purely domestic banks and reflects RCI's meaningful geographic diversification across Europe and in countries...

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