“Some investors found the discount too attractive, even taking into account the risks and challenges of the issuer going forward,” says López.
Investors took advantage of the price, even though the company’s risks have not fully dissipated. In May, Credito Real revealed that bad loans from January to March of this year almost doubled in size compared to the last quarter of 2020, so that its past due portfolio represents 3.3% of its total loans, from the 1.9% registered in the previous quarter. This clarification – sent on April 24 to the investing public – disturbed the markets that had observed that the company’s delinquency rate rose to 3.9% in its first quarter results.
On April 29, during a call to present its results that lasted more than two hours, a bucket of cold water fell on investors when they heard that a single loan from the portfolio of small and medium-sized companies caused the increase in the non-performing portfolio. Fitch Ratings and Standard & Poor’s reacted by cutting Crédito Real’s credit rating one notch within the speculative grade.
For the second quarter of the year, the delinquency rate did not recover, it remained at 3.8%, the loan portfolio grew 1% compared to the previous period, and the delinquency rates in loans to SMEs remained in double digits.
“Crédito Real has a proven business such as the payroll portfolio. However, due to the 2020 crisis, the past due portfolio has seen severe difficulties, especially in loans to SMEs: which has been the institution’s red light” Intercam noted in a report.
In order to extinguish this alert and reduce risks, Crédito Real announced the sale of a part of the assets of the SME segment, without offering further details in this regard. In addition, it confirmed that it was waiting to receive guarantees from a delinquent client. The market will closely follow the institution, as Intercam anticipates: “We will be attentive to the evolution of this case and we will monitor the concentration of this segment.”