Moody's downgrades Banistmo

Moody's Investors Service said it downgraded all ratings and assessments assigned to Banistmo, SA, including the long-term foreign-currency senior unsecured debt rating to Ba1 from Baa3. Moody's also lowered the baseline credit assessment and adjusted BCA to ba1 from baa3. The outlook on Banistmo was changed to stable from negative.

“The downgrade of Banistmo's BCA to ba1, which underpins the downgrade of the bank's ratings, mainly reflects the bank's continuously weak asset quality, with a high level of loan impairments, leading to a credit profile that is more aligned with ba1 rated peers globally. In addition, and despite improvements reported in the first half of 2023, high provisioning needs have negatively impacted the bank's bottom-line results in recent years.

“The positive credit drivers that continue to support Banistmo's creditworthiness are its strong capital buffers and stable core deposits that benefit from its well-established position as the second largest commercial bank in Panama that partially offsets its moderate liquidity buffers,” Moody’s explained in a press release.

The improved outlook reflects the view that the “bank's main credit metrics will remain broadly in line with its current BCA, including its strong capital buffers and adequate funding profile, while asset quality and profitability will likely remain its key credit challenges,” the agency said.

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