Fitch Affirms BCI Asset Management at 'Highest Standards'
OREANDA-NEWS. Fitch Ratings has affirmed the Asset Manager Rating for BCI Asset Management Administradora General de Fondos S.A. (BAM) at 'Highest Standards'. The Rating Outlook is Stable.
KEY RATING DRIVERS
BAM's 'Highest Standards' rating reflects Fitch's opinion that the manager's investment platform and operating framework are superior relative to the standards applied by international institutional investors.
BAM's rating is driven by the stability of the company's core operations and processes. It benefits from the continued strategic commitment of its shareholder Banco de Credito e Inversiones BCI ('A-'/Outlook Positive/'F1'). The rating is also driven by its strong franchise in the Chilean market and diversified client base, a broad organizational structure, an effective and highly structured risk and governance framework, robust investment process and robust operating platform. During the last year, there have been some senior level changes (a change of CEO) and reorganization in business and research areas, without impact on the rating.
BAM's main challenges are to continue to develop its research area, especially with regard to bottom-up analysis, in order to increase the asset under management of its value added strategies. In addition, BAM faces the challenge of keeping on track with its IT developments efforts in order to support the increased complexity of the investment strategies and to better control quality.
BAM's 'Highest Standards' rating is based on the following assessments:
Company: High
Controls: Highest
Investments: Highest
Operations: Highest
Technology: High
Company
Established in 1988, BAM has extensive experience and strong position in the local market. BAM benefits from the commitment of its main shareholder and has a high degree of staff breadth and depth across the organization with good levels of stability, despite the change of CEO that occurred in 2015.
Its financial flexibility is sound with low debt, adequate profitability ratios and steady growth of assets under management. The company recorded revenue growth of 35% and an operating profit margin of 61.3% in 2014 (63.8% in last 12 month at end-September 2015).
Controls
BAM's risk management, control framework and compliance are robust, with an independent structure. The company has adequate systems and processes to identify and control market, credit and liquidity risks, as well as to ensure compliance with all regulatory requirements and group policies. Control procedures are highly automated, providing online follow up and control of all portfolios managed by the company.
Investments
BAM's investment process is formalized, based on regular committees and backed by sufficient resources and marked by in-depth research, a disciplined buy-and-sell process and formal portfolio reviews. Its investment decisions combine a top-down strategy for the international market and bottom-up for the domestic and MILA market, based from a fundamental analysis. While fixed-income investment is its key strength, to increase number of complex products, the asset manager expanded and reorganized its research area, in order to improving the quality and analytical coverage.
Operations
BAM has its own middle- and back-office; its processes have a strong level of automation, and its operations are adequately controlled and supported by a stable and experienced team. The information BAM provides to the investor is adequately distributed, transparent, and extensive, and it is kept flexible to adapt to individual requirements.
Technology
BAM's technological platform is robust, benefits from a high level of automation, following upgrades to its front-office and back-office systems in 2014 ('Front-On' and 'Golf' respectively). That should enable greater integration of these activities, as well as an increased degree of automation, efficiency and quality. BAM reports high investments in systems and controls, which are constantly improving. Security and contingency back up resources are solid and provide a very good level of service in case of need.
Company Profile
With 26 years' experience, BAM is the asset management arm of BCI. The company is the third-largest asset management company in Chile, with AUM of USD7.3 bn at end-September 2015. BAM manages a diversified product portfolio with significant market share in mutual funds and dedicated mandates, concentrated in bond and money market funds.
RATING SENSITIVITIES AND SURVEILLANCE
The rating may be sensitive to material adverse changes to any of the aforementioned rating drivers, notably through weakened financial conditions, heightened staff turnover or deterioration of processes and policies. A material deviation from Fitch's guidelines for any key rating driver could cause the rating to be downgraded.
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