Moodys Outlook for Edwards Stable

Moody's confirmed its long term foreign currency deposit rating of Baa1 for Banco de A. Edwards (#Edwards#) (NYSE: AED) and lowered the Bank Financial Strength Rating to D+ from C. The outlook was revised to stable. The agency had placed the ratings on review for downgrade on June 7, 2000. Moody's confirmed Edwards' long term foreign currency deposit rating based on the strong commitment and support of controlling shareholders in the form of new capital, the restructuring and reinforcement of its senior management team, and a clear plan for repositioning the bank in the medium term. Moody's noted that Edwards' earnings and asset quality have deteriorated significantly during the past two years, reflecting the negative effects of the Chilean recession and the bank's relatively high lending concentrations with middle market and construction companies, which were among the hardest hit during the 1998-1999 recession. These factors resulted in a sharp increase in the bank's non-performing loans, leading the bank to take two large provisioning charges for bad debts in late 1999 and early 2000 that resulted in net losses to the bank. The charges were related to loan reclassifications and the revaluation of collateral in connection with a major loan review and clean-up by the new owners. The lowered Bank Financial Strength Rating also points to analysts' expectations that Edwards' earnings and balance sheet will continue to be weaker than they have been historically for the near term. The agency expects the slow recovery of the middle market and individual segments of the economy to contain business volume and core earnings growth as well as to prolong the loan recovery process. The stable outlook for the Bank Financial Strength rating reflects its solid franchise and the expectation of a gradual return to profitability through the resumption of loan growth and improved fee generation. Edwards is Chile's sixth largest bank in terms of loans, according to September figures from the #Banking Superintendence of Chile#