Press Release

DBRS Morningstar Assigns Ratings to Grupo Cooperativo Cajamar; LT Rating at BB (high), Neg Trend

Banking Organizations
November 26, 2020

DBRS Ratings GmbH (DBRS Morningstar) assigned new ratings to Grupo Cooperativo Cajamar (GCC or the Group), Cajamar Caja Rural, Sociedad Cooperativa de Credito (Cajamar), and Banco de Crédito Social Cooperativo S.A. (BCC). The assigned ratings include Long-Term Issuer Ratings of BB (high) and Short-Term Issuer Ratings of R-3. The Trend on all ratings is Negative. The Group’s Intrinsic Assessment (IA) is BB (high) and the Support Assessment is SA3. Cajamar’s and BCC’s Support Assessment is SA1. See the full list of ratings in the table at the bottom of this press release.


The BB (high) IA reflects the Group’s sound cooperative franchise in Spain, particularly in the agriculture sector in its home markets of Almeria and Valencia, and provides the Group with a stable customer deposit base. The ratings also consider the Group’s high levels of Non-Performing Loans (NPLs) and Non-Performing assets (NPAs), which remain a burden to the Group’s low profitability, although the Group has made progress in reducing them since 2013. GCC’s ratings also take into account the Group’s modest capitalisation, which albeit improved, provides only modest capital cushions over its minimum capital requirements.

The Negative Trend reflects DBRS Morningstar’s view that the wide and evolving scale of economic and market disruption resulting from the coronavirus (COVID-19) pandemic will continue to negatively impact the operating environment for banks in Spain, including GCC. DBRS Morningstar expects the Group’s risk profile to deteriorate, despite the various measures taken by the Spanish government and the European authorities to mitigate the negative economic impact of the pandemic. DBRS Morningstar also notes that the Group has a relatively high exposure to SMEs which may be severely affected in this environment, however a large part of these are related to the agriculture sector that may be less negatively impacted in the current environment.

The support assessment for GCC is SA3, implying no uplift to the Long-Term Issuer Rating from systemic support. Cajamar and BCC both have SA1 support assessments to reflect that both entities benefit from the internal support structures, including the management of funding, liquidity and solvency, and the mutualisation of results across the Group. It also reflects the shared strategy of both entities, set up by BCC, and the same management reporting, treasury management and risk management.


An upgrade of the Long-Term Issuer Rating is unlikely in the short-term given the negative trend and the economic implications from the global pandemic. An improvement in profitability and efficiency, combined with continued progress in asset quality and a strengthening of the capital position, would lead to an upgrade of GCC’s Long-Term Issuer Rating. The trend could return to Stable if the Group is able to manage through the current challenging environment with only a limited asset quality and capital impact.

A downgrade of the Long-Term Issuer Rating would result from a deterioration in the loan portfolio, a prolonged and substantial fall in profitability, or a weakening of the Group’s capital cushions.

BCC‘s and Cajamar’s ratings are equalised with the ratings of GCC. As a result, any positive or negative actions on GCC’s ratings would be mirrored in the ratings of BCC and Cajamar.


GCC’s IA of BB (high) is underpinned by the Group’s sound franchise position as the largest cooperative bank in Spain, as measured by total assets. The Group enjoys significant market shares for agriculture loans in Spain of around 14.5% and has meaningful regional market shares in the regions of Almeria (around 45%) and Valencia (around 10%). However, the Group’s national market shares are more modest at around 2.9% for loans and 2.3% for customer deposits at end-2019.

GCC’s profitability has been affected by the COVID-19 crisis in 2020, however, core revenues have been resilient, showing a reduction of only 0.6% YoY in 9M 2020. Net fees were down 7.4% YoY, but this was compensated by higher Net Interest Income (NII) which increased by 2.2% YoY. In 9M 2020 GCC booked EUR 245 million of loan loss provisions (LLPs), a cost of risk of 107 bps, down slightly on 112 bps recorded in 9M 2019 (as calculated by DBRS Morningstar). The reduction in LLPs compared to 9M 2019 reflects the high level of provisions taken in 2019 as part of the continuation of the balance sheet clean-up. Nevertheless, net attributable profit was down 82% YoY as results from financial operations were significantly lower than during 9M 2019. DBRS Morningstar considers that profitability will continue to be pressured in coming quarters due to the interest rate environment, and the likelihood that the cost of risk will remain high, given the expected challenging environment in Spain in 2021.

GCC’s weak asset quality and high level of NPAs is a key consideration for the ratings, however despite COVID-19, the Group’s asset quality has not experienced a material deterioration in 9M 2020. Non-Performing Loans (NPLs) decreased at end-Q3 2020 by 10% Year-to-Date (YTD) as the Group continued to be make good progress in cleaning-up its balance-sheet, in line with the trend seen in the last few years. Nevertheless, GCC continues to have a substantial level of legacy NPAs from the previous crisis, as shown by the NPA ratio of 12.3% at end-Q3 2020 (vs. 14.6% at end-Q3 2019, as calculated by DBRS Morningstar). The high level of NPAs places the Group at a weaker starting point than many domestic peers to cope with future asset quality deterioration. The NPL ratio was 5.3% at end-Q3 2020 (as calculated by DBRS Morningstar), improved from 6.8% the year before, largely helped by organic NPL recoveries. The Group has reinforced NPL coverage levels during recent years and at end-Q3 2020 these stood at 56% (as calculated by DBRS Morningstar), in line with the levels seen at domestic peers.

DBRS Morningstar understands the unprecedented support measures announced by the Spanish government, as well as several other international authorities and central banks, including the implementation of the debt moratoriums and state-guaranteed loans have been a key factor in the Group being able to limit the impact on asset quality. However, we consider asset quality will inevitably deteriorate due to the economic restrictions triggered by the COVID-19 pandemic, and once the moratoria measures are lifted from Q4 2020. As of end-Q2 2020 the Group has granted EUR 1.1 billion of loans with state guarantees, which represents around 3.6% of the total loan book. In addition, a total of EUR 775 million of applications for loan moratoria had been granted by end-Q2 2020 and as of this date around 2.5% of its total loan book was under moratoria.

DBRS Morningstar views GCC’s funding and liquidity position as being underpinned by the solid and stable customer deposit base generated through its cooperative business model. At end-Q3 2020, the net loan to deposits ratio was 92% (as calculated by DBRS Morningstar). The Group also has a solid liquidity position supported by a large pool of liquid assets totaling EUR 8.7 billion, or 17% of end-Q3 2020 total assets. At end-Q3 2020 the Group also has the capacity to issue EUR 3 billion of covered bonds. GCC reported a Liquidity Coverage Ratio (LCR) of 211% and a Net Stable Funding Ratio (NSFR) of 127% at end-Q3 2020. Funding from the European Central Bank (ECB) stood at around EUR 9.5 billion at end-Q3 2020, accounting for around 19% of total funding, a significantly higher proportion than at end-2019 as the Group took advantage of TLTRO III to support profitability.

At end-Q3 2020 the Group’s CET1 ratio (phased-in) was 13.06% and its total capital ratio (phased-in) was 14.74%. This compares to a minimum SREP Capital Requirement (OCR) for total capital of 13.0% for 2020. As a result, the minimum capital cushion over the requirements was 174 bps, lower than the average of Spanish peers. The cooperative credit institutions within the Group (including Cajamar) are owned by its members who contribute to the capital. Capital contributions from its members was substantial during the previous crisis and in 2019 reached EUR 171 million, representing 73 bps of the Group’s CET1 ratio (phased-in). This is viewed positively as the Group’s ability to increase capital through retained profits or capital markets is limited.


A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at:

The Grid Summary Grades for Grupo Cooperativo Cajamar are as follows: Franchise Strength – Good/Moderate; Earnings – Moderate/Weak; Risk Profile – Moderate/Weak; Funding & Liquidity – Moderate; Capitalisation – Moderate/Weak.

All figures are in EUR unless otherwise noted.

DBRS Morningstar notes that this Press Release was amended on December 7th 2020 to incorporate the Initial Rating Date.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (8 June 2020)

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release:

The sources of information used for this rating include Company Documents, GCC 2019 & 9M 2020 Presentations, GCC 2019 & 9M 2020 Press Releases, GCC 4Q 2019 & 3Q 2020 Report, GCC 2019 Annual Accounts, European Banking Authority Risk Dashboard, Bank of Spain and S&P Global Market Intelligence. DBRS Morningstar considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS Morningstar does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.

This rating concerns a newly rated issuer. This is the first DBRS Morningstar rating on this issuer.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar's outlooks and ratings are under regular surveillance.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see:

The sensitivity analysis of the relevant key rating assumptions can be found at:

Ratings assigned by DBRS Ratings GmbH, are subject to EU and U.S. regulations only.

Lead Analyst: Pablo Manzano, Vice President, Global FIG
Rating Committee Chair: Ross Abercromby, Managing Director - Global FIG
Initial Rating Date: November 26, 2020
Last Rating Date: N/A

DBRS Ratings GmbH, Sucursal en España
Calle del Pinar, 5
28006 Madrid
Tel. +34 (91) 903 6500

DBRS Ratings GmbH
Neue Mainzer Straße 75
60311 Frankfurt am Main Deutschland
Tel. +49 (69) 8088 3500
Geschäftsführer: Detlef Scholz
Amtsgericht Frankfurt am Main, HRB 110259

For more information on this credit or on this industry, visit