TSB credit rating climbs to positive

The credit rating outlook for Taranaki-based TSB Bank has improved, says Standard & Poor's.

The global ratings agency yesterday affirmed the bank's BBB long-term and A-3 short-term credit ratings, revising the long-term rating outlook from stable to positive.

S&P said the outlook revision reflected the bank's steady transition into a stronger institution, with an improving financial strength that could be sustained by management over the medium term.

"The change in outlook reflects the moderation of previously constraining factors, principally, TSB Bank's small absolute size of capital and lack of geographical diversification," said credit analyst Gavin Gunning.

"A pleasing development over the past year has been the adoption by TSB Bank of a finalised treasury management policy and its generally more integrated approach towards risk management."

The rating was supported by TSB's dominant retail banking franchise within the Taranaki region, its good asset quality, good track record of operating performance, low-risk credit profile and good access to low-cost retail deposits.

Moderating features of TSB Bank's credit profile included its relatively concentrated business focus that remained reliant on interest income, and limited capital flexibility, reflecting its trust-based ownership structure, and small capital base.

- NZPA