Bank of the Year Ecuador: Banco Pichincha
October 31, 2019
Despite Ecuador’s economic challenges, the bank is achieving growth and
continues to strengthen its position
Banco Pichincha has benefitted from recent positive news in what has been a challenging environment in Ecuador. Its profit was the highest among local banks in 2018 at $119.7 million followed by Banco del Pacifico with $100.2 million . What’s more, Fitch revised the outlook for Pichincha and other local banks in August to stable from negative, while affirming their long-term issuer default ratings at B-.
The change follows Fitch’s recent revision of Ecuador’s sovereign rating outlook to stable from negative. In explaining the revision, the ratings agency cites the $4.2 billion package from the IMF and a recent bond buyback that have helped take pressure off the country’s finances.
Fitch also cites Pichincha’s strong local brand, diverse business model and solid liquidity for its market of operation.
In February, Ecuador took a financing package from the IMF that called for steep spending cuts, higher bank reserves and business-friendly reforms.
The country also secured another $6 billion in funding from the World Bank, IDB, CAF, FLAR, EIB and AFD.
The agency says it expects a more stable financial environment in the country will benefit local banks. Still, Fitch reports banking ratings will likely remain constrained by Ecuador’s low sovereign rating, which remains at B-.
Ecuador still faces a financing gap of $1 billion in 2019 and $2 billion in 2020.
But Fitch says the country has room to maneuver after it repurchased the $1.5 billion it had in 10.5% 2020 bonds in June. Fitch expects Ecuador’s GDP will be unchanged in 2019, compared to 1.4% in 2018.