The rating reflects the solid standing of FCA Bank (FCAB) as one of Europe’s largest car finance providers, as well as its strong financial fundamentals. FCAB’s business model consistently delivers revenue and profit growth, with higher returns than those generated by traditional, lower risk commercial banking peers.

The ratings benefit from FCAB’s strong earnings generation capacity and asset quality, comfortable headroom to capital requirements and balanced funding, although Crédit Agricole Group remains an important funding source for the bank. The support of the Crédit Agricole Group provides an additional one-notch uplift to the rating. Among emerging long-term potential risks, we highlight climate transition risk, which may disrupt the bank’s activities if not adequately managed, both by FCAB and by its main industrial partner, Stellantis.

FCAB’s issuer rating is two notches above the rating of the Republic of Italy (BBB+/Negative). In accordance with our bank rating methodology, no mechanistic caps are applied based on the sovereign rating, although sovereign risk is considered for each issuer. In FCAB’s case, the correlation between the bank and the sovereign is low due to FCAB’s geographic diversification and lack of exposure to Italian sovereign bonds.

The bank’s resilient financial performance in 2020 validates the business model's consistency and ability to generate strong results, even in adverse economic conditions. The Outlook is Stable, reflecting our expectation that FCAB’s performance will prove resilient to the deteriorated operating environment. 

This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term.

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