Fitch Affs Providian Financial; Lowers Individual Rating.Business Editors NEW YORK--(BUSINESS WIRE)--July 27, 2001 Fitch affirms Providian Financial Corp's (Providian) and Providian National Bank's (PNB PNB Produit National Brut (French) PNB Punjab National Bank (India) PNB Philippine National Bank PNB Producto Nacional Bruto (Spanish: Gross National Product) ) long-term deposit rating of `BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. +', senior debt rating of `BBB', trust preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. of `BBB-' and short-term ratings of `F2'. The Individual rating for Providian and PNB has been lowered to `B/C' from `B'. The long-term Rating Outlook for both entities remains Stable. Fitch's affirmation and stable rating outlook continues to reflect the company's growing franchise in the U.S. credit card market, where it is the fifth largest credit card issuer with over $30 billion of managed loans and $17.7 million accounts, solid core earnings and profitability performance and sound risk-adjusted capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. . Earnings and profitability remain relatively strong, although the risk-adjusted revenue margin (RARM RARM Resource Allocation Response Message ), has come under pressure due to higher loss rates. For the most recent quarter ended June 30, 2001, Providian's RARM remained healthy at 13.79%, although down from previous periods. The company's capitalization on both an absolute and risk-adjusted basis, remains sound relative to the risk profile. Providian's equity to managed assets remained healthy at 6.76% at June 30, 2001. Despite these positive factors, Fitch has lowered the Individual rating of Providian and PNB to `B/C' from `B' reflecting the company's more pronounced shift into the lower spectrum of the consumer credit market which has contributed to higher net charge-offs and downward momentum in the risk-adjusted margin over the past few quarters. Furthermore, Fitch's analysis of lagged charge-off and delinquencies rates suggests that these trends will likely persist over the near term. Fitch's Individual rating, measures a bank's business and financial profile absent any external support, and assesses a bank's exposure, appetite and management of risk which Fitch believes, on balance, has increased. Providian has attempted to re-emphasize the `platinum' segment of the market, while at the same time lessen exposure to the `standard' segment where losses are highest. Fitch believes these initiatives have yet to show demonstrable de·mon·stra·ble adj. 1. Capable of being demonstrated or proved: demonstrable truths. 2. Obvious or apparent: demonstrable lies. results and therefore losses will remain at elevated levels. Providian Financial, based in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , CA, is a leading financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. holding company whose principal banking subsidiary is Providian National Bank. The company maintains a growing presence in the U.S. credit card market with over $30 billion of managed receivables at June 30, 2001. |
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