Rating on TSB Bank revised to positive
Standard & Poor's Ratings Services revised its rating outlook on New Zealand-based TSB Bank (TSB; BBB/Positive/A-2) to positive from stable, reflecting the bank’s resilient earnings profile and strong ability to manage and withstand market downturns.
TSB’s resilient earnings profile benefits from the higher-than-peers net interest margin, strong cost efficiency, and strong asset quality.
According to Standard & Poor's Ratings Services, TSB’s financial profile has continued to improve, and the bank benefits from its solid franchise, conservative management, and broadened geographic presence.
However, the retail funding market is presently experiencing some disruptions as some finance companies are placed in receivership or liquidation, which may affect the broader market. Standard & Poor’s will continue to monitor these markets, although they expect TSB to be well placed to contend with present market conditions.
The ratings on TSB are further underpinned by the bank’s strong asset quality, strong capitalization, and solid regional franchise.
TSB holds a dominant business franchise and brand within the Taranaki region of New Zealand. This competitive strength allows TSB to enjoy a loyal client base, which forms the basis of its stable retail-deposit funding base.
Moderating rating factors include the bank’s limited business diversity, concentrated funding profile, and developing balance-sheet management capability.
30-Aug-2007