Rating

Fitch Ratings

On June 13, 2022, Fitch Ratings affirmed the Bank’s National Long-Term Rating at ‘AA-(bra)’ with Stable Perspective; and the Short-Term National Rating at ‘F1+(bra)’. Banese’s domestic ratings reflect Fitch’s opinion that, if required, the bank would receive support from its controlling shareholder, the state of Sergipe, whose credit profile is evaluated by the agency internally. Fitch believes that Banese is strategically relevant for Sergipe, since it is the main financial agent of the local government and has a significant market share in credits and deposits in the state. For the agency, the institution’s size compared to the financial ability of Sergipe has a high influence on the ratings. According to the agency, the bank has a stable business model and adequate economic-financial indicators.

 

Moody´s Latin America Ltda (“Moody’s Local”)

On June 29, 2021, Moody’s América Latina Ltda (“Local Moody’s”) assigned Banese an AA-.br rating, with an AA-.br rating on the Bank’s long-term deposits and an ML A-1.br rating on its short-term deposits, both on a national scale, with a negative outlook, due to the exposure of its business segments that are more vulnerable to the COVID-19 pandemic, which can affect asset quality and profitability.

 

Moody’s Investors Service (Moody’s)

On April 25, 2022, Moody’s Investors Service (Moody’s) downgraded Banese’s long-term local and foreign currency deposit rating to Ba3, from Ba2, and the baseline credit assessment to Ba3, from Ba2. Banese’s long-term local and foreign currency counterparty risk ratings were also downgraded to Ba2, from Ba1, and the counterparty risk ratings (CRAs) to Ba2(cr), from Ba1(cr). All short-term ratings and Agribusiness Receivables Certificates (CRAs) were affirmed at Not Prime and Not Prime (cr). The rating outlook was changed from negative to stable. The revision of the ratings reflects the lower quality of assets and profitability metrics Banese has reported since 2019, after adopting a strategy to increase its business diversification by expanding its small and mid-sized enterprise loan portfolio in the state of Sergipe, especially after the COVID-19 pandemic in 2020. The revision also considered the Bank’s more challenging scenario of profitability in the next 12 months, as a result of a strong and rising pressure on funding costs due to the rapid increase in interest rates in Brazil.

 

Rating Agencies Classification

Agency Scale Long-Term Short-Term Outlook
Fitch Ratings National AA- (bra) F1+ (bra) Stable
Moody’s Local National – Deposits AA-.br ML A-1.br Negative

Moody’s Investors Service
National – Deposits Aa3 br BR-1 Stable
Global in Domestic Currency – Deposits Ba3 Not Prime Stable
Global in Foreign Currency – Deposits Ba3 Not Prime Stable