Moody's upgrades Banco Hipotecario del Uruguay

Moody's Investors Service said it upgraded Banco Hipotecario del Uruguay's baseline credit assessment and adjusted baseline credit assessment to Ba3 from B1.

Moody's also said it affirmed the bank's global and Uruguayan national scale deposit ratings of Baa2 and Aaa.uy.

The outlook is stable.

The upgrades reflect a consistent improvement in asset quality metrics, underpinned by a drop of more than 870 basis points in the problem loan ratio during the past five years, the agency said.

The ratings also consider the bank's very strong capitalization and proven access to stable, low cost funding, Moody's said.

These strengths are counterbalanced by the bank's lack of business diversification, earnings volatility, term mismatches on its balance sheet and modest liquidity, the agency said.

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