Moody's ups Banco do Brasil strength to D

Moody's Investors Service said it upgraded Banco do Brasil's financial strength rating to D from E+.

Moody's also affirmed the bank's long- and short-term global local-currency deposit ratings of A3/Prime -2, the Ba1 long-term foreign-currency bond rating, B1/Not Prime long- and short-term foreign-currency deposit ratings and Aaa.br and BR-1 long- and short-term Brazil national scale deposit ratings.

The outlook for the long- and short-term foreign-currency deposit rating is positive. The remaining ratings have a stable outlook.

This rating action concludes the review for possible upgrade initiated on Aug. 9.

Moody's said the upgrade reflects material improvement in the bank's financial performance and in its profitability and asset-quality indicators, in particular, which places the bank well among other similarly rated global bank peers.

The rating action also recognizes Banco do Brasil's efforts in reducing the stock and changing the profile of its tax credits - a move that has resulted in higher-quality tangible capital, the agency said.

However, that bank is challenged to maintain credit quality in the context of robust loan growth and increasing competition, particularly in the consumer lending segment, the agency said. Moreover, a change in the benign operating environment could potentially halt or reverse the improvement in asset-quality indicators.

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