Moody’s and Augusto & Co., have affirmed Heritage Bank’s capitalisation high following the lender’s low asset risk model, which capacity to generate income from its core business and settle its obligation as at when due.
Moody said under the new methodology, the bank’s credit metrics’ ratings remain consistent with an a3 BCA when measured against Australia’s macro profile.
According to a statement from Heritage Bank, this was part of efforts to provide investors with objective analyses and independent assessments of its securities, bonds and credit assets.
It is also meant to engage the services of Moody and Augusto & Co. to provide 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,” Heritage Bank said.
According to the rating agency, the a3 BCA takes into account the bank’s low asset risk model that supports its very strong asset quality. Relative to its asset risk profile the bank maintains sound capitalisation.
This is contained in Moody’s new bank methodology, which confirmed Heritage Bank’s long-term A3 issuer rating and affirmed its short-term issuer rating of Prime-2.
“The bank’s baseline credit assessment (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 has 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.
These new elements capture insights gained from the 2008-09 financial crisis and, the fundamental shift in the banking industry and its regulation.
