S&P: BBVA Banco Continental 'BBB/A-2' Ratings Affirmed; Outlook Remains Stable
Our ratings on BBVA Banco Continental reflect its strong business position as the second-largest bank in Peru; adequate capital and earnings based on projected risk-adjusted capital ratio (RAC) of more than 7%; satisfactory risk position with operations focused on lending and healthy asset quality metrics; average funding, in line with those of its peers, and sound liquidity. The bank's stand-alone credit profile (SACP) remains at 'bbb'. The long-term issuer credit rating on the bank is at the same level as its SACP because it doesn't incorporate notching from external support.
Banco Bilbao Vizcaya Argentaria S. A. (BBVA; BBB+/Stable/A-2) and Breca group (not rated) jointly control 92.24% of BBVA Banco Continental. In our view, the bank is BBVA's strategically important subsidiary, given that its operations, risk management practices, and strategy are consistent with those of BBVA group. This status allows BBVA Banco Continental to incorporate up to three notches into its SACP due to expected extraordinary group. However, the notching is subject to a cap of one notch below the parent's group credit profile (GCP), unless the subsidiary's SACP is at least equal to the GCP, in which case, the potential long-term ICR of the entity is at the GCP level.