Moody’s and Augusto & Co., have affirmed that Heritage Bank’s capitalisation remains sound in relation to its low asset risk model.
They also said it has the capacity to generate income from its core business to settle its obligation as at when due.
According to Moody, under the new methodology, the bank’s credit metrics’ ratings remain consistent with an a3 Baseline Credit Assessment (BCA), when measured against Australia’s macro profile.
The A3 rating comes after the Aaa, Aa1, Aa2, and Aa3 ratings. A rating itself shows that whatever securities rated are “upper-medium grade and are subject to low credit risk.”
But the bank has said that its engagement with the rating agencies was part of efforts to furnish investors with objective analyses and independent assessments of its securities, bonds and credit assets, thereby providing superior information on credit risk and other investment instruments.
“The international and local ratings investment metrics is a welcome development to the bank and, in light of this sterling achievement, we swiftly need to improve on our performances in order to boost our subsequent ratings,” a statement from the bank noted.
According to the rating agency, relative to the bank’s asset risk profile, it maintains sound capitalisation when benchmarked against Moody’s new methodology, which confirmed long-term A3 issuer rating and affirmed its short-term issuer rating of Prime-2.
“The bank’s BCA, which encapsulates its stand-alone financial profile, and its adjusted BCA were also confirmed at a3. The outlook for all ratings is stable,” the agency stated.
The new bank rating methodology includes a number of elements that Moody’s developed to help accurately predict bank failures and determine how each creditor class is likely to be treated when a bank fails and enters resolution.