Fitch ups Bancolombia to positive

Fitch Ratings said it affirmed Bancolombia's long-term foreign- and local-currency issuer default ratings at BBB- and short-term foreign- and local-currency issuer default ratings at F3.

The outlook was revised to positive from stable.

Fitch also affirmed Bancolombia Panama's long-term foreign-currency issuer default rating at BBB- and short-term foreign-currency issuer default rating at F3.

Bancolombia's ratings and outlook reflect its strong franchise, solid earnings generation, ample deposit and customer base, diversified loan portfolio and revenues, sound asset quality, adequate reserve coverage and sound liquidity and capital, the agency said.

The ratings consider the relatively higher operating costs, lower efficiency and pressures on margins, the agency added.

The outlook considers that Bancolombia's performance reached a turning point in the second quarter of 2010 as the bank resumed strong loan growth, the agency noted. Average loan volumes gradually increased since then and helped mitigate the decline in margins.

As Bancolombia resumed loan growth, higher loan volumes and relatively stable margins should allow for an increase in interest revenues while non-interest revenues continue to grow, the agency added.

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