PRESS RELEASE: Fitch Affirms Caja Navarra's IDR At A
Fitch Ratings-London-29 October 2009: Fitch Ratings has today affirmed Caja de
Ahorros y Monte de Piedad de Navarra's (Caja Navarra) Long-term Issuer Default
Rating (IDR) at 'A' with Stable Outlook, and downgraded its Individual rating to
'B/C' from 'B'. Its Short-term IDR 'F1', Support '3' and Support Rating Floor
'BB+' have been affirmed.
The downgrade of the Individual Rating reflects Fitch's view that Caja Navarra
is challenged to maintain operating profitability while absorbing loan
impairment charges from asset quality deterioration during Spain's recession.
While Caja Navarra's operating profitability has remained stable over the years,
it has traditionally been weaker than peers due to lower margins and fairly high
non-interest expenses. For H209 and 2010, Fitch forecasts further revenue
pressure although active management of customer spreads, large generic reserves,
and capital gains from the its equity investments portfolio could help ease the
impact on profits.
The Stable Outlook reflects the caja's good capital base and strong franchise
in Navarra, one of the wealthiest regions in Spain, where unemployment rates and
GDP growth are better than the Spanish average. Moreover, Caja Navarra has a
relatively low risk profile, with lower exposure to real estate and construction
(18% of total loans at end-June 2009) than peers and a high proportion of
lending to individuals (63% of total loans at end-June 2009), which have partly
helped maintain a better-than-average asset quality. The impaired loans/total
loans ratio at end-H109 was 3.1%, with a 80% loan loss coverage. Caja Navarra
also has a large and stable regional customer deposit base (70% of total loans
at end-H109), and a EUR2bn portfolio of eligible assets which supports
liquidity.
Caja Navarra was the 19th-largest caja by total assets at end-H109. It focuses
on retail banking and its operations are centred on the northern region of
Navarra.
In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's
Individual ratings and the prospect of external support is reflected in Fitch's
Support ratings. Collectively these ratings drive Fitch's Long- and Short-term
IDRs.
Contacts: Maria Rivas, London, Tel: +44 207 417 6322; Maria Jose Lockerbie ++
44 207 417 4318.
Media Relations: Hannah Warrington, London, Tel: +44 (0) 207 417 6298, Email:
hannah.warrington@fitchratings.com.
Additional information is available on www.fitchratings.com.
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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://
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WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES
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(END) Dow Jones Newswires
10-29-091310ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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