Latest S&P ratings put territory banks under the spotlight
HANG Seng Bank's 'satisfactory' rating reflects 'its strong financial parameters, including capital and liquidity ratios that are impressive by international comparison; and solid profitability and asset growth'.
It benefited from its majority shareholder, Hongkong Bank, and operational efficiency is high, but if the Hongkong Bank affiliation is excluded, its market position is viewed as less favourable. The outlook is 'stable'.
NANYANG Commercial Bank's 'adequate' rating reflects its satisfactory financial parameters such as profitability, asset quality and capital.
However, this is offset to a large extent by its small market position and above average industry risk factors including high loan growth and minimal long-term sources of funds in the domestic market. The outlook is 'stable'.
HONGKONG Bank's high A-1 short-term rating reflects its dominant position in the domestic market and a satisfactory business and financial risk profile.
STANDARD Chartered's ratings upgrade reflects the bank's increased profitability, improving asset quality and strengthened profitability. Its long-term certificate of deposit rating is A, short-term CD rating is A1. The outlook is 'stable'.
BANK of East Asia has good financial indicators, somewhat 'offset by its small market position'. Its capital compares well on an international basis, and it is expected to maintain high capital levels.
Profitability will be under pressure because of reduced lending growth to residential property borrowers, but revenues from its diversified business lines should somewhat mitigate these difficulties.
DAO Heng Bank has a solid financial profile but small market position, good balance sheet liquidity, and is well-capitalised. It benefits from ownership by Guoco Group. Outlook is 'stable'.
WHAT RNAKINGS MEAN STRONG The institution appears to have a strong capacity to meet deposit and other financial obligations on a timely basis.
SATISFACTORY The institution appears to have a satisfactory capacity to meet deposit and other financial obligations on a timely basis, with only slight susceptibility to adverse economic, business or financial conditions.
ADEQUATE The institution appears to have an adequate capacity to meet deposit and other financial obligations on a timely basis, but protection levels appear to be more susceptible to adverse economic conditions or changing circumstances.
VULNERABLE The capacity of an institution to meet deposit and other financial obligations on a timely basis appears to be vulnerable to adverse economic, business or financial conditions.
INADEQUATE The institution appears to have an inadequate capacity to meet deposit and other financial obligations. Protection levels are low and uncertainties and/or major risks exist.