Fitch Affirms Tarjeta Naranja's IDR at 'B'

Tools

BUENOS AIRES, Argentina & NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed Tarjeta Naranja S.A.'s (TN) ratings as follows:

--Long-term local and foreign currency Issuer Default Rating (IDR) at 'B';

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

--National long-term rating at 'AA(arg)';

--National short-term rating at 'A1+(arg)';

--Individual rating at 'D';

--Support rating at '5';

--USD300 million unsubordinated fixed-rate debt long-term local currency rating at 'B/RR4' and National long-term rating at 'AA(arg)';

--USD50 million unsubordinated fixed-rate notes National long-term rating at 'AA(arg)';

--ARS80 million short-term notes National short-term rating at 'A1+(arg)'.

The Rating Outlook is Stable.

TN's ratings reflect its strong growth; maintenance of its sound historical profitability, asset quality, and liquidity; and its satisfactory capital base. They also reflect the benefits of belonging to the Tarjetas Regionales Group (owned by Banco de Galicia y Buenos Aires), which has ample experience in the credit card business. Additionally, the potentially volatile operating environment in Argentina was also factored in the ratings.

Despite TN's stand-alone strength, the low sovereign ratings add significant ratings compression to most Argentine issuers. Upside rating potential for TN lies in a sovereign upgrade. Downside potential exists in significant deterioration in the operating environment, affecting TN's asset quality and capitalization. Given its strong historical performance, Fitch views TN's individual rating as stable. Downward pressure could arise from a significant rise in loan loss provisions that affect the bank's profitability or from markedly lower capitalization.

TN's sound profitability is based on strong revenue generation and growth, adequate cost efficiency and healthy asset quality. Fitch expects TN's profitability to remain robust in 2011 as the economic environment is set to remain benign.

TN's lending has grown significantly in recent years. In 2010, loan growth resumed after a sharp slowdown suffered in 2009 due to lower demand and a self-imposed restriction following the economic slowdown. Asset quality ratios have historically been very good considering its activity and the segments served, based on conservative credit limits and good scoring systems. NPLs have declined since 2009 due to the economy's recovery, accounting for a low 3.16% of total loans at March 31, 2011, and were fully reserved.

TN's liquidity is strong, supported by the short-term nature of its lending. Also, it has had access to capital market funds through bond issuance, interbank lending, and loan securitizations, helping extend funding maturity. Exposure to foreign currency risk is low.

TN's capital base is ample, with an equity/assets ratio of 21.73% at March 31, 2011. Despite significant growth, strong internal capital generation has allowed it to maintain a satisfactory capital base.

TN was established in 1985 in the Province of Cordoba. Since 1996 it has expanded significantly and now operates in most of the country. At March 31, 2011 TN had about 4.7 million credit cards and 171 branches and commercial offices.

TN is 80% owned by Banco de Galicia y Buenos Aires, the third largest private sector bank in Argentina by deposits.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 16, 2010).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

CONTACT:

Fitch Ratings
Primary Analyst
Santiago Gallo, +54-11-5235-8137
Director
Fitch Argentina Calificadora de Riesgo S.A.
Sarmiento 663 - piso 7 - C1041AAM
Buenos Aires, Argentina
or
Secondary Analyst
Ana Gavuzzo, +54-11-5235-8133
Senior Director
or
Committee Chairperson
Franklin Santarelli, +1-212-908-0739
Managing Director
or
Media Relations:
Cindy Stoller, New York, +1-212-908-0526
cindy.stoller@fitchratings.com