Credit upgrade for TSB Bank
TSB Bank’s credit outlook has been raised to stable, a year after it was downgraded to negative.
Ratings agency Standard and Poor’s announced the change due to a reduced exposure to risks posed by inflation in the property market.
‘‘The revision of the outlook from negative to stable reflects our belief that increasing risks relating to asset price inflation in the property market and high consumer leverage across New Zealand no longer represent material risks for the bank,’’ said credit analyst Andrew Mayes.
Standard and Poor’s said it believed the impact of risks related to strong residential property price growth since early 2013 was likely to be less pronounced for TSB Bank than for some other New Zealand banks.
Factors specific to TSB Bank included its limited exposure to Auckland and Christchurch, and the low loan-to-value ratio position across its lending portfolios.
Standard and Poor’s also affirmed the bank’s BBB+ longterm and A2 short-term investment grade credit ratings.
In a written statement, the company said it believed the bank had a ‘‘substantial buffer for absorbing a modest retrace in residential property prices without a resultant increase in credit costs.
‘‘Our stable outlook factors in our expectation that the bank would maintain a forecast risk- adjusted capital ratio above 15 per cent should property market pressures cause us to adopt a weaker view of economic risk in New Zealand than currently factored in our assessment of New Zealand’s banking system.
‘‘At the same time, the stable outlook reflects our belief that the bank’s asset-quality position would not be materially negatively affected by a limited correction in New Zealand’s property market.’’
Eight banks were downgraded last year – TSB Bank, Co-operative Bank, Heartland Bank, Credit Union Baywide, Credit Union South, First Credit Union, New Zealand Association of Credit Unions, and Police and Families Credit Union.