Fitch Ratings has affirmed
Fitch has also affirmed the Long- and Short-Term ex-government support (xgs) ratings at 'BBB(xgs)' and 'F3(xgs)'. The Rating Outlook remains Stable. A full list of rating actions follows at the end of this release.
Key Rating Drivers
Issuer Ratings Equalized with Head Office's Ratings: ICBC Pan's ratings reflect its status as a branch of ICBC. It is part of the same legal entity (ICBC), with which the branch is fully integrated. The agency states that
International Operations: ICBC Pan intends to increase ICBC's footprint in Latin American (LatAm) markets, focusing on selected countries. As of YE 2023, most loan exposures are in
Good Asset Quality: Fitch expects ICBC Pan's sustain a good asset quality given the robust profile of its clients and despite high debtor concentration. Also, in line with HQ's guidelines, loan loss allowances over impairments would be high and above the Panamanian banking system average.
Concentrations will be high in every respect in the foreseeable future and will only be reduced in the medium to long term; Fitch believes this risk is properly assessed and mitigated by the capital support the branch receives from its Head Office. Fitch does not foresee material changes in the bank's securities portfolio due to the HQ mandate to invest in local sovereign-backed securities. As of YE 2023, total securities comprised around 17% of total assets (2022: 18%).
Low Operating Profitability: Fitch believes that ICBC Pan's profitability metrics will remain relatively low in the predictable future, nevertheless, the entity reached its breakeven point in 2023 and continues to record positive retained earnings. As of YE 2024, operating profit over average total assets was of 0.6%. Once a more mature stage of business development is reached profitability would align with niche corporate banks.
Capitalization Supported by Headquarters: The agency believes the branch will remain well capitalized as its policies indicate that total equity should remain at around 5x over the regulatory minimum of
Ample Funding Structure and High Liquidity: ICBC Pan benefits from an adequate number of funding lines from its HQ and subsidiaries based in various jurisdictions plus three credit lines from a local Panamanian bank, and two others from Chinese banks. Deposit taking comes from ICBC's Vietnamese office only and is expected to grow in customers in the short to medium term since filing is still in process. Liquidity remains high, as of YE 2023, liquidity coverage ratio (LCR) stood around 218% while liquid assets represent around 20% of total assets.
Branch xgs Ratings Aligned with ICBC's: The xgs ratings of ICBC Pan are aligned with those of ICBC, which reflects its status as a branch of the latter.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of ICBC's IDRs could drive down ICBC Panama Branch's ratings;
A downgrade of
The Long-Term and Short-Term IDRs (xgs) of ICBC Pan would be downgraded if the IDRs (xgs) of
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
ICBC Panama Branch's IDRs would mirror any positive change in ICBC's IDRs.
The Long-Term and Short-Term IDRs (xgs) of ICBC Pan would be upgraded if the IDRs (xgs) of
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
ICBC Pan's ratings are derived from the ratings of its head office
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