Moody's Affirms Banco Continental's Ratings, Cites Diversification and Strong Capital Position

Strategic Insights -

Moody's Investors Service has affirmed Banco Continental S.A.E.C.A.'s long and short-term bank deposit ratings, reflecting the bank's sound market position in Paraguay and strong capital position. The upgrade of the bank's standalone Baseline Credit Assessment (BCA) to baa3 acknowledges Continental's efforts to diversify its business, including the expansion of cross-border lending, and maintain a low-cost funding structure. Despite severe climate shocks and economic fluctuations, Continental has consistently maintained superior asset quality, with a 1.9% ratio of loans that were refinanced, restructured, or under special regulatory measures as of April 2025.

Key Takeaways:

  • Banco Continental S.A.E.C.A.'s long and short-term bank deposit ratings were affirmed at Baa3 and Prime 3, respectively, for local and foreign currencies.
  • The bank's Baseline Credit Assessment (BCA) was upgraded to baa3, citing its sound market position in Paraguay, strong capital position, and efforts to diversify its business.
  • Continental has consistently maintained superior asset quality, with a 1.9% ratio of loans that were refinanced, restructured, or under special regulatory measures as of April 2025.
  • The bank's acquisition of Banco Rio S.A.E.C.A. is expected to enhance its footprint in the SME sector, aligning with its strategic focus on reducing borrower concentration and improving margins.
  • Continental's capitalization remains strong, supporting its growth strategy and ensuring substantial loss-absorption capacity.
  • The bank's extensive branch network and diverse funding base help counterbalance market funding risks.
  • Moody's assesses a high probability of support from the Government of Paraguay, but this does not result in any uplift to the bank's deposits.

Statistics:

  • Moody's affirmed Banco Continental's deposits and senior unsecured debt ratings.
  • The bank's Baseline Credit Assessment (BCA) was upgraded to baa3.
  • Continental increased its deposit share to 16% from 13% over the past five years.
  • The bank's net income to tangible assets averaged 2% over the past four years.
  • Continental's reserve to problem loans ratio accounted for 217% of total loans as of December 2024.
  • The bank's loan collateralization mitigates effective losses.
  • Continental's acquired Banco Rio S.A.E.C.A.'s SME sector footprint is expected to boost the bank's growth potential.

Sources:

  • Moody's Investors Service
  • Banco Continental S.A.E.C.A.