Fitch affirms Khan Bank, XacBank

Fitch Ratings said it affirmed Khan Bank LLC's and XacBank LLC's foreign-currency long-term issuer default ratings at B, foreign-currency short-term issuer default rating at B and local-currency long-term issuer default rating at B.

The outlook remains negative.

The downgrade reflects the company's limited financial flexibility due to weak loan quality, low reserve coverage levels and vulnerable capitalization, Fitch said, especially if the banks continue to grow their loans quickly without raising adequate additional capital.

The agency said it will downgrade Khan Banks' and XacBank's long-term issuer default ratings in six months if the banks fail to materially strengthen their capital to bolster reserves.

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