Moody's: Banco Cruzeiro outlook negative

Moody's Investors Service said it affirmed Banco Cruzeiro do Sul's ratings and changed to negative from stable the outlook on the Ba1/Not Prime global local-currency deposit ratings, Aa2.br/BR-1 Brazil national scale deposit ratings and the Ba1 senior and Ba2 subordinated debt ratings.

The outlook on the Ba2/Not Prime long- and short-term foreign-currency deposit ratings remains stable.

The change in outlook reflects Moody's view that the bank's franchise value and profitability are likely to be challenged by a less robust growth and increasing competition in its core product, payroll loans, which currently contributes 85% of its recurring earnings. Moreover, the agency said, upcoming accounting changes and increasing funding costs could also pressure the bank's recurring profitability.

Moody's said it acknowledges the bank's expertise and relevant position in the payroll loans segment, where it ranks among the four largest loan originators.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.