NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings of the Dominican-based Banco Multiple Leon (BML) as follows:

--Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'B-';

--Short-term foreign and local currency rating at 'B';

--Individual at 'D/E';

--Support at '5';

--Long-term National rating at 'BBB+(dom)';

--Short-term National rating at 'F2(dom)';

--Long-term National subordinated debt at 'BBB-(dom)';

--Support Floor at 'NF'.

The Rating Outlook is Stable.

BML's ratings reflect adequate liquidity ratios and improved asset and income diversification. The operational support of its sole shareholder, the Leon family, is also reflected. On the other hand, BML's ratings are still limited by its relatively volatile asset quality, burden of operating costs, and still low profitability levels.

BML's ratings would be positively affected by sustainable improvements to its asset quality metrics and profitability. A reversion of the bank's capital ratios or further deterioration of its profitability could negatively affect its ratings.

Despite the advances on credit risk control and clean up of most of the legacy problem loans, asset quality metrics are still volatile and lag the average of BML's competitors. At May 31, 2010, past-due loans represented 5.3% of total loans, above the market average, with loan-loss reserves representing just 88% of the impaired figure. Past-due loans are somewhat concentrated as well. Restructured loans decreased to slightly less than 1% as of May 2010. Given BML's burden of some legacy issues, the need to enhance its overall risk control tools, and the challenges of the operating environment, asset quality metrics are expected to remain volatile in the short term.

Contrary to the challenges on the credit risk area, BML has been successful enhancing its revenue source, improving its net interest margin, and slowly diluting its burden of operating expenses into a larger balance sheet. Loan-loss provisions remain less controlled due to the aforementioned issues regarding credit quality. As such, after several years with very low or negative operating profits, BML was able to post an operating profit to average assets ratio of almost 1% during 2009, a trend that may continue through 2010, barring further deterioration of the loan portfolio.

BML's capital base has steadily improved since 2006. As such, no cash dividends have been paid since 2004; during 2009, a new minority shareholder injected USD12 million into BML's capital base. As a consequence, BML's equity-to-assets ratio stood at 8.2% at May 31, 2010 (versus 6.5% in 2004), while the Fitch eligible capital to adjusted weighted risks ratio was 12.4%, in line with its peers and considered reasonable, given the current business plan of the bank.

As of May 2010, BML ranked fifth out of 12 commercial banks, with a 5.22% market share by total assets. At the same date, the Leon family controlled 88.3% of BML, while Darby Probanco Holding L.P. (a subsidiary of Franklin Templeton Investments) controlled the remaining 11.7%.

These rating actions reflect the application of Fitch's current criteria which is available on Fitch's web site at www.fitchratings.com and specifically include: 'Global Financial Institutions Rating Criteria' (December 2009).

Additional information is available at www.fitchratings.com.

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CONTACT:

Fitch Ratings, New York
Franklin Santarelli, +1-212-908-0739
Larisa Arteaga, +1-908-563-2482 (Santo Domingo)
Media Relations:
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com

KEYWORDS:   United States  North America  Caribbean  Dominican Republic  New York

INDUSTRY KEYWORDS:   Professional Services  Finance

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