We consider that Abanca's capitalization is strengthening on the back of a hybrids issuance, increased earnings retention, and some sizable capital gains on noncore asset disposals. We now expect that Abanca's risk-adjusted capital ratio will increase to levels sustainably above 7% from 2018 onward, and its asset quality will remain sound when compared to its domestic peers. We are therefore raising our long-term issuer credit rating on Abanca to 'BB+' from 'BB' and affirming our 'B' short-term issuer credit rating. The stable outlook reflects our view that in the coming 12-18 months, even if Abanca's returns improve, further aided by the more supportive economic environment, its limited underlying profitability versus peers will continue to constrain its ratings. On Oct. 2,
