Reuters: Financial Services and Real Estate: TEXT-Fitch Affirms New Zealand's Major Bank Ratings

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TEXT-Fitch Affirms New Zealand's Major Bank Ratings Mar 30th 2012, 04:03 Fri Mar 30, 2012 12:03am EDT SYDNEY, March 29 (Fitch) Fitch Ratings has affirmed ANZ National Bank Limited's (ANZNB), ASB Bank Limited's (ASB), Bank of New Zealand's (BNZ) and Westpac New Zealand Limited's (WNZL) ratings, including their Long-Term Foreign and Local Currency Issuer Default Ratings at 'AA-' with Stable Outlook. A full rating breakdown is provided below. The IDRs and Support Ratings of ANZNB, ASB, BNZ and WNZL reflect a very high probability of support from their respective parents. Fitch believes that the Australian parent banks would be both willing and able to provide support should it be required. All four banks are supervised by the Reserve Bank of New Zealand (RBNZ) and, as subsidiaries, are also subject to oversight by the Australian Prudential Regulation Authority. Nonetheless, Fitch considers there to be only a moderate probability that the RBNZ would provide direct support to its four largest domestic banks, if required. Viability Ratings for all four major New Zealand banks are affirmed at 'a', reflecting consistently strong operating profitability, sound asset quality and strong capitalisation. A high reliance on offshore wholesale markets for funding is the most notable weakness in their credit profiles; this is evident in their loan-to-deposit ratios which are well in excess of 100%. A number of positive steps have been taken to reduce risks associated with a high reliance on wholesale funding. Fitch expects further improvements to funding profiles following regulatory changes made by the RBNZ to include a core funding ratio, and as the banks fund new loans with deposits and lengthen their wholesale funding maturity profiles through the issuance of covered bonds. These are important positive steps, as Fitch expects wholesale funding markets to remain volatile in 2012. While the FY11 impaired asset ratios of ANZNB and WNZL are higher than those reported by ASB and BNZ, asset quality for all four banks is strong by international standards. The Christchurch earthquake has not significantly impacted the banks' asset quality and ratios should gradually improve in 2012 in conjunction with Fitch's expectation of a mild economic recovery. Against a weak economic backdrop, all four banks have performed well, generating strong operating profitability, improved net interest margins and operational efficiencies. Fitch expects the banks to continue producing strong results in FY12, with earnings gains derived largely from further asset repricing, tight cost control and reduced loan impairment charges. The biggest threat to performance is developments in the eurozone, which if negative, could trigger further market volatility and lower economic growth. All four major banks are owned by major Australian banks and accounted for around 80% of the New Zealand banking system at end-2010. ANZ National Bank Limited (ANZNB): Long-Term Foreign Currency IDR affirmed at 'AA-'; Outlook Stable Short-Term Foreign Currency IDR affirmed at 'F1+' Long-Term Local Currency IDR affirmed at 'AA-'; Outlook Stable Short-Term Local Currency IDR affirmed at 'F1+' Viability Rating affirmed at 'a' Support Rating affirmed at '1' Senior unsecured rating for short-term notes affirmed at 'F1+' Senior unsecured rating for long-term notes affirmed at 'AA-' Senior unsecured rating guaranteed by the New Zealand government affirmed at 'AA' ASB Bank Limited (ASB): Long-Term Foreign Currency IDR affirmed at 'AA-'; Outlook Stable Short-Term Foreign Currency IDR affirmed at 'F1+' Long-Term Local Currency IDR affirmed at 'AA-'; Outlook Stable Short-Term Local Currency IDR affirmed at 'F1+' Viability Rating affirmed at 'a' Support Rating affirmed at '1' Bank of New Zealand (BNZ): Long-Term Foreign Currency IDR affirmed at 'AA-'; Outlook Stable Short-Term Foreign Currency IDR affirmed at 'F1+' Long-Term Local Currency IDR affirmed at 'AA-'; Outlook Stable Short-Term Local Currency IDR affirmed at 'F1+' Viability Rating affirmed at 'a' Support Rating affirmed at '1' Senior unsecured rating affirmed at 'AA-' Westpac New Zealand Limited (WNZL): Long-Term Foreign Currency IDR affirmed at 'AA-'; Outlook Stable Short-Term Foreign Currency IDR affirmed at 'F1+' Long-Term Local Currency IDR affirmed at 'AA-'; Outlook Stable Short-Term Local Currency IDR affirmed at 'F1+' Viability Rating affirmed at 'a' Support Rating affirmed at '1' Senior unsecured rating affirmed at 'AA-' Senior unsecured rating guaranteed by the New Zealand government affirmed at 'AA' Link this Share this Digg this Email Reprints

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