(The following statement was released by the rating agency)
July 26 -
===============================================================================
Summary analysis -- DBS Bank (Hong Kong) Ltd. --------------------- 26-Jul-2012
===============================================================================
CREDIT RATING: AA-/Stable/A-1+ Country: Hong Kong
Primary SIC: Commercial banks,
nec
Mult. CUSIP6: 237009
===============================================================================
Credit Rating History:
Local currency Foreign currency
19-Jul-2005 AA-/A-1+ AA-/A-1+
10-Jul-2005 AA-/A-1+ A+/A-1
===============================================================================
Ratings Score Snapshot
Issuer Credit Rating AA-/Stable/A-1+
SACP a
Anchor a-
Business Position Adequate (0)
Capital and Earnings Strong (+1)
Risk Position Adequate (0)
Funding and Liquidity Average
and Adequate (0)
Support +2
GRE Support 0
Group Support +2
Sovereign Support 0
Additional Factors 0
Major Rating Factors
Strengths:
-- Status as a "core" subsidiary of DBS Group
-- Strong capitalization
-- Strong track record of containing credit losses
Weaknesses:
-- Recent rapid growth in credit risk exposures
-- Loan-to-deposit ratio exceeding domestic industry average
Outlook
The stable outlook on DBSHK reflects the outlook on its parent.
An upgrade of DBS could trigger a similar action on DBSHK. We could lower the
rating on DBSHK if we downgrade DBS or if we no longer consider DBSHK to be a
core subsidiary of DBS group. A change in SACP of DBSHK is not likely to have
a direct impact on the issuer credit rating on DBSHK, unless it is significant
enough to change the parent group's credit profile.
Rationale
The rating on DBS Bank (Hong Kong) Ltd. (DBSHK) reflects the bank's status as
a core subsidiary of DBS Bank Ltd. (AA-/Stable/A-1+; axAAA/--/axA-1+). We
expect the banking sector regulator in Singapore to allow DBS to provide
timely and strong support to its Hong Kong subsidiary.
We assess DBSHK's stand-alone credit profile (SACP) as 'a' based on the anchor
SACP for banks operating predominantly in Hong Kong. We also consider DBSHK's
"adequate" business position, "strong" capital and earnings, "adequate" risk
position, "average" funding, and "adequate" liquidity, as our criteria define
those terms.
The anchor SACP for a bank operating predominantly in Hong Kong is 'a-'. This
draws on our Banking Industry Country Risk Assessment methodology and our view
that Hong Kong has an economic risk score of '3' and an industry risk score of
'1'.
Our economic risk assessment of Hong Kong reflects its wealthy, highly
competitive, and resilient economy. Substantial potential imbalances have
built up in the economy because of volatile housing prices and rapid credit
growth over the past few years. The robust financial profile of Hong Kong's
household and corporate sector, the strong payment culture and effective legal
framework, and major banks' underwriting standards mitigate the credit risks
in the economy.
Our industry risk assessment benefits from Hong Kong's strong institutional
framework and effective banking regulations and supervision. The sector's
funding is well supported by the customer deposit base. Banks' risk appetite
is generally restrained, and we do not note any market distortions in Hong
Kong.
DBSHK's seventh rank in terms of total assets among banks incorporated in Hong
Kong supports its business position. However, the bank's market shares in
loans and deposits are below 5%. While DBS' corporate banking business is
booked outside DBSHK, the latter focuses on serving retail customers and small
and midsize entities. DBSHK has a fairly well established franchise in
segments such as credit cards and trade finance. Leveraging on DBS group's
franchise and regional connectivity, DBSHK has been growing its offshore
Chinese renminbi business, which enhances its earnings. The bank's revenue
stability and customer stickiness are in line with industry average, in our
view.
We expect DBSHK's risk-adjusted capital ratio to stay above 10% over the next
two years. We anticipate that the bank's loan growth will slow down
substantially in 2012 and 2013, as compared with the rapid growth in 2011. We
also believe the bank's profit generation and retention will partially
mitigate the negative impact of continuous loan growth on capitalization.
These factors support our assessment of DBSHK's capital and earnings.
Our risk position assessment for DBSHK reflects our expectation that the
bank's strong growth momentum, driven by a sharp rise in trade bills
discounting in 2011, will cool down substantially amid reduced demand and
challenging economic conditions in 2012. We also expect DBSHK to contain its
potential credit losses through its prudent underwriting standards and
sophisticated risk management capabilities.
We consider DBSHK' funding to be "average" and its liquidity as "adequate".
The bank's loan-to-deposit ratio is higher than the domestic industry average.
However, a significant proportion of its loan book is trade bills or trade
finance, which are typically short-term. The bank's retail network is also
stronger than that of many of its smaller peers in Hong Kong, in our view.
Reliance on external wholesale funding is also limited, as the bulk of DBSHK's
interbank borrowings are from its parent, which would be more flexible to the
bank.
The issuer credit rating on DBSHK is equated to DBS's group credit profile of
'aa-'. DBSHK operates in key business lines and is integral to the group's
regional aspiration. The bank represents a significant part of the group's
balance sheet and is a significant profit contributor. DBSHK also shares the
group's brand and leverages the broad recognition of it.
We consider DBSHK to have "moderate" systemic importance in Hong Kong,
implying a "moderately high" likelihood of extraordinary support from the
government of Hong Kong (AAA/Stable/A-1+; cnAAA/cnA-1+). This potential
support does not affect the current rating, as the impact is less than the
parent group support.
Related Criteria And Research
-- Hong Kong And Singapore Banks' Credit Quality Can Withstand A Mild
Recession In Europe, May 17, 2012
-- Banking Industry Country Risk Assessment: Hong Kong, April 12, 2012
-- Research Update: DBS Bank Ltd. And DBS Bank (Hong Kong) Ltd.
'AA-/A-1+' Ratings Affirmed On Parent's Announced Acquisition Of Danamon,
April 3, 2012
-- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
-- Banking Industry Country Risk Assessment Methodology And Assumptions,
Nov. 9, 2011
-- Group Rating Methodology And Assumptions, Nov. 9, 2011
-- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011
Source: http://news.yahoo.com/text-p-summary-dbs-bank-hong-kong-ltd-090624094--sector.html
apple juice apple juice occupy la miranda kerr adriana lima victoria secret angels fox 4
