Fitch Upgrades Banco Dominicano del Progreso's Ratings.

NEW YORK -- Fitch Ratings, the international rating agency, has today upgraded Banco Dominicano del Progreso's (BDP) long-term foreign currency rating to 'B-' (Outlook Stable) from 'CCC+' and the short-term foreign currency rating to 'B' from 'C'. At the same time, the bank's individual 'D/E' and support '5' ratings were affirmed. Long- and short-term local currency ratings of 'B-' and 'B', respectively, were assigned for the first time. The bank's national long-term rating was upgraded to 'BBB+(dom)' from 'BBB(dom)' and the national short-term rating upgraded to 'F2(dom)' from 'F3(dom)'. The upgrades reflect the recent sovereign rating upgrade and the adequate performance of the bank following the severe deterioration of the operating environment during 2003 and 2004. BDP ratings reflect its stable asset quality and adequate liquidity ratios. The ratings also reflect the constraints imposed by a narrower net interest margin and heavy overheads and its tight capital levels, similar to most of its peers

In light of the severe deterioration in the operating environment during 2003 and 2004, BDP implemented a proactive credit collections policy to reduce its credit risk, while the sudden Dominican Peso (DOP) revaluation since the second half of 2004 resulted in a 22% reduction in the gross loan portfolio. At the end of March 2005, the bank's past-due to total loans ratio was a high 7.1%, a level similar to its peer average. At that date, loan loss reserve coverage was 139%, boosted by a significant increase in loan loss provisions during 2003 and 2004. After more than doubling its deposit base in 2003, the bank was successful in maintaining its market share. This strategy coupled with weak loan demand and the aforementioned collections policy resulted in a significant increase of its cash and securities portfolio, which together accounted for 51% of total assets at the end of 2004. This increase resulted in an increase of the bank's exposure to government debt (mostly Central Bank short- and medium-term CDs), representing 1.2 times (x) the bank's equity, similar to its competitors but considered high in view of the low sovereign rating (long-term local currency rated 'B' by Fitch)

As of March 2005, BDP ranked fourth out of 12 commercial banks, with a 10% market share by total assets. BDP remains the exclusive issuer and acquirer of American Express cards in the Dominican Republic; this position has allowed it to develop a private banking business. BDP is controlled by a number of well known families in the Dominican Republic that also have interests in other financial entities involved in insurance, stock brokerage, factoring, and leasing. BDP's shareholders also own 30% of BBVA Crecer AFP, a pension fund administrator, in conjunction with Spain's Banco Bilbao Vizcaya Argentaria, which holds the remaining 70% stake.

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