Reuters: Financial Services and Real Estate: TEXT-Fitch affirms Bendigo & Adelaide Bank at 'A-';outlook stable

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TEXT-Fitch affirms Bendigo & Adelaide Bank at 'A-';outlook stable May 1st 2012, 08:18 Tue May 1, 2012 4:18am EDT (The following statement was released by the rating agency) May 01 - Fitch Ratings has affirmed Bendigo and Adelaide Bank Limited's (BEN) Long-Term Issuer Default Rating (IDR) at 'A-' with Stable Outlook. A full rating breakdown is provided below. The affirmation of BEN's ratings reflects its stable and solid domestic retail banking franchise, sound funding and liquidity position as well as its strengthening capitalisation. The ratings also recognise the bank's sound asset quality and acceptable profitability. "BEN's loan/deposit ratio has improved over the past three years to the extent that its loan book is almost entirely funded by customer deposits," said Andrea Jaehne, Director of Fitch's Financial Institutions Team. "Wholesale funding that remains consists mostly of non-recourse match-funded securitisations which pose little by way of refinancing risk." At the end of the financial half year ended 31 December 2011 (H1FY12), BEN's capitalisation was bolstered by a AUD150m share issue, which saw the bank's Fitch Core Capital ratio (FCC) rise to 8.1% (FYE11: 7.5%). Although this ratio is at the lower end compared to peers, on an unweighted-risk base BEN's equity/total asset ratio is strong. Australian regulatory requirements for risk-weightings under a standardised approach are conservative and the main reason why BEN's regulatory ratios are comparatively low. The bank's FCC should continue to improve supported by internal capital generation. Operating profitability in H1FY12 was constrained by a goodwill write-down of AUD95m. This write-down related to BEN's wealth cash generating unit, where volatile equity markets and poor sentiment are expected to have a negative impact on future earnings. Excluding this one-off item, operating profitability would have remained stable, despite challenging market conditions. High funding costs and moderate business growth are the factors most likely to pressure earnings in FY12. In H112, BEN's impaired loan ratio declined to 0.75% (FY11: 0.78%). The bank's loan book is well-diversified by industry and borrower and mostly secured by real estate, while high loan/value ratio loans comprise an acceptable proportion of the total loan book. Arrears remain high in BEN's exposure to investors of Great Southern Limited Investment Management Scheme, but accounts are closely managed. BEN is a regional bank operating across Australia. Bendigo and Adelaide Bank Limited (BEN): Long-Term IDR affirmed at 'A-'; Outlook Stable Short-Term IDR affirmed at 'F2' Viability Rating affirmed at 'a-' Support Rating affirmed at '3' Support Rating Floor affirmed at 'BB' Commercial paper affirmed at 'A-' and 'F2' Senior unsecured debt affirmed at 'A-' Short-term debt affirmed at 'F2' Link this Share this Digg this Email Reprints

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