RCI Banque

The stable outlook on RCI incorporates our view that the bank's financial risk profile will remain strong, with robust risk-adjusted profitability and continued conservative capital management over the next two years. Furthermore, an upgrade or downgrade of Renault (BB+/Stable/B), all else being equal, would not automatically entail a similar rating action on RCI. We could downgrade the bank if Renault's creditworthiness comes under 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 RAC falling sustainably below 10%, or if contagion risks from Renault start affecting RCI's access to debt markets or cost of funding. To raise our long-term rating

...We expect RCI to continue focusing on car financing while leveraging its strong captive franchise. As an auto captive wholly owned by Renault S.A., RCI's revenues and loan exposures are closely tied to car sales within the Renault-Nissan Alliance and the broader automotive sector, a historically volatile business segment that is currently facing challenges. However, we believe RCI can defend its market position in its different markets, while the electrification of vehicle financings and the shift toward financial leasing will continue to support loan book growth. In 2023, new financing for electric vehicles (EVs) rose by 7%, representing over 7.3% of total new financing, and we anticipate continued growth in this area over the next two years as Renault plans key EV launches over 2024 and 2025. At the same time, financial leasing rose to 31% of total new financing in 2023 compared with 25% in 2018. Additionally, RCI's investments in Select Car in the U.K. and the acquisition of MeinAuto...

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