PRESS RELEASE: S&P Revises Standard Chart. Bank Otlk To Stbl;A+/A-1 Rtgs Afmd

22nd Jun 2010 10:09

The following is a press release from Standard & Poor's: -- Standard Chartered Bank (SCB) has exceeded our previous expectations for its earnings and capitalization. -- We are therefore revising our outlook on SCB to stable from negative. At the same time, we are affirming the 'A+/A-1' counterparty credit ratings. -- The stable outlook reflects our view of the bank's continuing solid business profile, and our expectation that its financial profile will remain resilient over the rating horizon. LONDON (Standard & Poor's) June 22, 2010--Standard & Poor's Ratings Services said today that it revised its outlook on Standard Chartered Bank (SCB) to stable from negative. At the same time, we affirmed its 'A+/A-1' long- and short-term counterparty credit ratings. Furthermore, we revised the outlooks on SCB's holding company, Standard Chartered PLC, and on its three subsidiaries, Standard Chartered Bank (Hong Kong) Ltd., Standard Chartered Bank (China) Ltd., and Standard Chartered Bank (Taiwan) Ltd., to stable from negative and affirmed the long- and short-term counterparty credit ratings on these entities. "The outlook revision reflects our view that SCB will likely demonstrate another year of resilient earnings in 2010 and, supported by generally favorable economic conditions in its main markets, also over the rating horizon," said Standard & Poor's credit analyst Giles Edwards. The outlook revision also reflects our view that the bank's capitalization has strengthened materially over the past year, helped by capital raising and strong retained earnings, and compares well with peers'. While we identify some potential downside risk due to economic imbalances in some of its markets, we expect that SCB would be able to comfortably absorb any resultant impairment charges within its operating income. The ratings reflect our opinion of SCB's strengths, specifically its diversification, liquidity and funding profile, solid historical returns, relatively strong capitalization, and its good track record at dealing with stresses. The ratings also factor in some moderate weaknesses, notably that it has a leading position in very few of its markets and that there is an earnings bias toward wholesale banking, particularly in the current low interest rate environment. Additionally, while asset quality is satisfactory, it is still recovering after an elevated loan loss charge in the last financial year. "The stable outlook reflects our view that the bank will maintain its solid business profile and that the financial profile will remain resilient," added Mr. Edwards. It also factors in our opinion that economic conditions will generally support earnings, there will be no change to risk appetite, and that the bank's funding profile and capitalization will remain important strengths. We expect that SCB will continue to pursue a largely organic growth strategy, with occasional bolt-on acquisitions. In our view, a more transformational acquisition remains possible, but this scenario is not reflected in the ratings. A positive rating action would likely result from a combination of factors including a materially enhanced contribution by the consumer banking operations, further improvement to SCB's market positions, and very strong earnings and asset quality. A further significant rise in capitalization would also be supportive. A negative action would most likely arise from a material deterioration in asset quality, which was not offset by improvements in other financial metrics such as income and capital. RELATED RESEARCH AND CRITERIA -- Asia-Pacific Sovereign Report Card: 2010 Will Be Testing For Policymakers, Feb. 2, 2010 -- S&P Ratio Highlights Disparate Capital Strength Among The World's Biggest Banks, Nov. 30, 2009 -- Bank Rating Analysis Methodology Profile, March 18, 2004 Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4011. Primary Credit Analyst: Giles Edwards, London (44) 20-7176-7014; [email protected] Secondary Credit Analyst: Richard Barnes, London (44) 20-7176-7227; [email protected] Additional Contact: Financial Institutions Ratings Europe; [email protected] No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. 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