Fitch: Ongoing Review of Parent's Statements Unlikely to Impact Finmart's Ratings

According to Fitch Ratings, on April 30, 2015, EZCORP Inc. (NASDAQ: EZPW, not rated by Fitch), Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R.'s (Finmart) ultimate parent, announced a delay in its earnings release for the second quarter of fiscal year 2015 (ended March 31, 2015). The delay is due to a current review of some specific errors in a portion of Finmart's credit portfolio that may affect registered loan loss reserves and interest income in EZCORP's consolidated financial statements under U.S. GAAP. Finmart's top management affirms the latter is an internal reclassification between Finmart and its parent that should not impact the reported statements under Mexican GAAP.

Fitch's baseline scenario is that Finmart's long- and short-term Issuer Default Ratings of 'B+' and 'B' respectively, as well as its long- and short-term national scale ratings of 'BBB+(mex)' and 'F2(mex)', should not be affected as a result of this internal review. However, Fitch will closely monitor the developments of the ongoing evaluation to assess any potential unexpected implications on Finmart's credit profile.

Mexican GAAP allows for more discretion on the recognition of impaired loans for unregulated non-bank financial institutions such as Finmart. Therefore, as part of its periodic review process, Fitch adjusts Finmart's reported impairment and capitalization metrics for the under-reserved portion of nonperforming loans, with the aim of making its financial statements as comparable as possible to the standard regulatory requirements in Mexico.

Additionally, Fitch has historically stated that ratings in this sector, including Finmart's, are affected by the high operational, political and event risks inherent in the public employers payroll deducted loans business. Fitch expects that these entities transition towards the use of more prudential accounting practices in the medium term, as regulators increase their oversight over these increasingly important players in the consumer finance segment.

Finmart, established in 2003, grants personal loans secured by payroll withholdings to unionized public sector employees in Mexico. In 2012, EZCORP, a consumer finance company based in Austin, TX, acquired 60% of Finmart, and increased its participation to 76% during 2014.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Non-Bank Financial Institutions Rating Criteria' (April 28, 2015);

--'National Scale Ratings Criteria' (Oct. 30, 2013).

Applicable Criteria and Related Research:

Global Non-Bank Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=865351

National Scale Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720082

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