Fitch affirms Crèdit Andorrà at BBB- and underscores its resilience in profit generation

• The fact the rating remains the same highlights the consolidation of the business strategy in a context marked by the COVID-19 crisis

• It also endorses the Bank’s leadership in support for the Andorran economy and its growth in business volume and profits internationally  

The international agency, Fitch Ratings, has affirmed Crèdit Andorrà’s long-term credit rating at BBB-. This rating testifies to the Bank’s resilience in the generation of profits, compliance with its strategic business plan and the consolidation of the Group’s diversification and international growth strategy.

Fitch’s report highlights the “strong position of Crèdit Andorrà in Andorra”, closing the 2020 financial year with consolidated profits of EUR 31.9 million, as well as the positive development of the Bank in an operating environment marked by the COVID-19 crisis. In this context, Crèdit Andorrà has spearheaded economic support in Andorra and has continued to grow internationally in terms of business volume and profits. It has also carried out a prudent policy of precautionary provisions to cope with the potential effects of the pandemic (EUR 11 million for specific provisions relating to possible asset impairment due to the coronavirus).   

The assessment from Fitch highlights the Bank’s strength, reflected in a “satisfactory capitalisation”, as demonstrated by the total regulatory capital ratio of 17.63% (15.91% CET1), above the average for European banks. The improved credit quality and the increased coverage ratio are also indicators of the Bank’s robustness considered in the assessment.

The fact that the rating is maintained is a reflection of the good progress in achieving the objectives set out in the strategic plan. The agency underscores the Bank’s strategy “focused on growing assets under management and rationalising its international presence to improve efficiency and contribution to profits”. Another aspect highlighted by Fitch is the growth in the international business, which increased 8.27% to EUR 9.765 billion. In this regard, the strategic plan also envisages the development of strategic alliances, specialisation in products and services that increase differentiation and added value and business diversification.

The report also considers the Bank’s exposure to lending activity in Andorra and, specifically, to the business fabric and people, to whom it has given and continues to give significant financial support. Of particular note is its support to the Andorran government’s extraordinary guarantee programme for companies and business, under which Crèdit Andorrà has provided 67% of the total amount of soft loans.

Fitch maintains the negative outlook in line with the position it took in its assessments last year and as a result of the possible impact of the COVID-19 crisis on the economic and financial environment.

Xavier Cornella, CEO of Crèdit Andorrà, said that “Fitch’s rating underscores the Bank’s good performance, strength and resilience in today’s particularly complex environment. The Bank’s robustness has allowed us to cope with the situation caused by COVID-19, faithful to our commitment to support the Andorran economy and, ultimately, the country and its people, while continuing with our international growth plan”.  

Crèdit Andorrà Group closed the 2020 financial year with an increase in business volume of EUR 17.47 billion, up 2.38% on the previous year, and assets under management grew by 2.6% to EUR 15.028 billion. Loan investment exceeded EUR 2.442 billion.