Credit rating summary
Standard & Poor’s
On 9 December 2021, Standard & Poor's Global Ratings affirmed its long-term counterparty credit rating at 'BBB+' and affirmed the short-term rating at 'A-2'outlook. Further to this, the positive outlook for BEN was affirmed.
The positive outlook on BEN reflects the view that there is a one-in-three possibility that Australian banks will face reduced industry risks in the next two years. S&P expect that BEN will maintain a strong RAC ratio of 10%-15% over the next two years. In addition, S&P consider that credit losses should remain low.
S&P expect to raise the long-term issuer credit rating on BEN by one notch to 'A-' if a view is formed that industry risks facing Australian banks have reduced sustainably, all else being equal.
On 8 June 2022, Fitch Ratings affirmed Bendigo and Adelaide Bank Limited's (BEN) Long-Term Issuer Default Rating (IDR) at 'A-' with a Stable outlook and affirmed the Viability Rating (VR) at 'a-'.
Fitch expects BEN's asset-quality metrics to weaken modestly in 2022 as they expect interest rates to continue rising although expect the deterioration to be manageable. Fitch’s base case forecasts the four-year average operating profit/risk-weighted assets (RWA) ratio at around 1.5%. Loan growth is likely to slow from the level in the financial year ended June 2021 (FY21), but the strong growth in FY21 should support robust earnings in FY22.
Further, Fitch expects BEN's capitalisation and leverage to remain around current levels, consistent with the management's operating range while there is expected to be limited funding and liquidity pressure for BEN over the next 12 months.
On 15 November 2021, Moody's affirmed the 'A3' long-term issuer and senior unsecured debt ratings of Bendigo and Adelaide Bank Limited. Moody's has also affirmed BEN's baseline credit assessment (BCA) of ‘baa1’ and short term rating of 'P-2'. The ratings outlook remain stable.
Moody's noted that BEN's ratings reflect the Bank's well-developed franchise centred around community banking, conservative management historically focused on low-risk lending, strong funding structure and good capital adequacy. Moody’s also noted BEN’s balance sheet buffers remain very strong as its asset profile is good with relatively low levels of nonperforming loans, but remains sensitive to the uncertainty of the pandemic in Australia.
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