Fitch Affirms Banco Multiple Leon Long-Term IDR at 'B-'

Fitch Ratings has affirmed Banco Multiple Leon S.A. (BML) ratings as follows:

--Foreign currency Issuer Default Rating (IDR) at 'B-';

--Local currency IDR at 'B-';

--Short-term foreign currency IDR at 'B';

--Short-term local currency IDR at 'B';

--Individual rating at 'D/E';

--Support rating of at '5';

--Support floor at 'NF';

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

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

--National subordinated debt rating at 'BBB-(dom)'.

The Rating Outlook is Stable.

BML ratings reflect the operational support of its sole shareholder, the Leon family, adequate liquidity ratios and the positive trend in income and asset diversification. On the other hand, BML's ratings are still limited by its tight capital base, relatively volatile asset quality and profitability metrics, and the burden imposed by a challenging operating environment. BML's ratings have a Stable Rating Outlook. Future upgrades will be dependent upon further enhancement of BML's capital base and profitability levels. Downside risk for the bank's ratings would stem from a back turn of its recovery process.

Asset quality metrics have improved since 2003, nevertheless, legacies from previous administrations (related parties lending, significant concentrations in corporate loans) and the initial effects of the fine tuning of the new risk control tools still hinder BML impairment figures. At end-March 2008, past due loans slightly decreased to 2.7% and loan loss reserve coverage decreased to almost 145%, similar to market trends. Nevertheless, restructured loans are still sizable at 2.7% but significantly lower than previous periods.

The steady increase in BML's operating income and asset base combined with relatively lower provision needs has supported some improvement in its profitability, although they still lag behind local and regional averages. During 2007, the bank's Return on Average Assets (ROAA) benefited from some nonrecurring income being that operating profits remained very low (0.2% of average assets). Going forward, an increase in business volumes and a tight control of operating expenses will be key in sustaining more adequate profitability levels.

Several capital injections and a no cash dividend distributions have served to help its cleanup process and also strengthen its depleted capital base. Nevertheless, a still sizable holding of fixed and foreclosed assets hinder the banks free capital ratio. At end-March 2008, the equity-to-assets ratio stood at 7.2%, while the free capital ratio was just around 0%. Going forward, the bank expects to enhance its capital base through capital injections, the sale and lease back of fixed assets, a conservative cash dividend policy in order to provide enough capital to sustain its business plan.

At year-end 2007, BML ranked fifth out of 12 commercial banks, with a 5% market share of total assets. The bank is owned by the Leon family, which in turn controls the largest industrial group in the Dominican Republic with considerable interests in the beverage sector.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.

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