OREANDA-NEWS. Fitch Ratings has affirmed the national ratings of Banco Credit Agricole Brasil S.A.(BCAB) as follows:

--National long-term rating at 'AAA(bra)'; Outlook Stable;
--National short-term rating at 'F1+(bra)'.

KEY RATING DRIVERS

The affirmation of BCAB's ratings reflects Fitch's consideration of the continued support from its parent, Credit Agricole Corporate and Investment Bank (CACIB; Long-term Issuer Default Rating [IDR] 'A'; Stable Outlook'). Fitch considers BCAB a strategically important subsidiary of CACIB, given its high level of managerial and operational integration with CACIB, as well as the strong synergies and common branding. Fitch also notes that, if needed, the cost of support would be low considering the relative small size of BCAB to the group.

BCAB's exposure remains concentrated, with the top 10 names (by economic group) representing a still high 90.4% of the total portfolio as per June 2014 (from 84% in Dec./13 and 89% in Dec./12). This aspect may add some volatility to BCAB's credit metrics should the financial profile of some of these groups deteriorate.

However, the institution benefits from good portfolio surveillance and vigilant credit monitoring which, in Fitch Ratings' opinion, partially mitigates the above mentioned negative aspects. As a result, the institution's 90 days past due credits to total credits remains zero. At June 2014, its loan portfolio (BRL 1,278 million) was comprised of only top companies rated 'AA' (91.6% of its portfolio) and 'A' (8.4%) - as per the Brazilian Central Bank's Resolution 2682/99. As expected, credit exposure through securities (notably, asset backed securities - FIDCs) continues to grow: BRL625million in June 2014, BRL502million at end-2013 from BRL258million at end-2012. Fitch believes that 2015 will be a more challenging year for the whole banking system in Brazil, which may bring further pressure in terms of both asset quality and profitability for foreign banks.

Fitch Core Capital ratio remained high 18.9% in June 2014, 22.2% at 22.2% in December 2013. As a result of more difficult environment in the last few years, the bank adopted a more cautious approach in conceding credit, therefore explaining stronger buffers in capitalization ratios. The proportion of funding from CACIB has increased in 2014 (31.3% in June 2014) in comparison with end-2013 (25.6%).

BCAB's results have been lower in the recent years (RoE of 3.6% during 1H14, from an average of 5.12% during the four previous fiscal years). This performance was explained partially by the conservationism in lending operations, and to a certain extent, by a more difficult economic backdrop in 2013 and 2014 compared to previous years.

RATING SENSITIVITIES

A multi-notch downgrade of CACIB and/or a change in the propensity to provide support to its subsidiary could lead to a negative rating action on BACB's national ratings.