Credit up­grade for TSB Bank

Taranaki Daily News - - Monday Business -

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.

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