S&P affirms Banco Mercantil do Brasil

Standard & Poor's said it affirmed its B/B counterparty credit rating on Banco Mercantil do Brasil SA.

The outlook is negative.

The agency said that the rating on Banco Mercantil do Brasil reflects the challenges faced by a midsize bank operating in the competitive banking industry in Brazil, the risk of potential asset quality deterioration and its low profitability when compared to the industry, which is negatively affected by the bank's large and costly operational structure and small scale.

These risk factors are partially offset by the bank's long track record operating in the market and knowledge of its core/niche market, mainly the state of Minas Gerais, which translate into good market share and brand-name recognition on a regional basis, its diversified operation and good liquidity management.

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