Latest Rating of IBT
| TRC |
Long term |
twA |
| (2008/06/16) |
Short Term |
twA-1 |
| |
Outlook |
Stable |
| History |
2007/06/15 |
twA/Stable/twA-1 |
| |
2006/6/20 |
twA/Stable/twA-2 |
|
2005/07/15 |
twA-/Positive/ twA-2 |
|
2004/12/22 |
twA-/Stable/ twA-2 |
| |
2004/07/15 |
twBBB/Stable/twA-3 |
| |
2001/07/09 |
twBBB-/Stable/twA-3 |
| International Rating |
|
|
| Standard & Poor's |
Long term |
BBB- |
| (2008/06/17) |
Short term |
A-3 |
| |
Outlook |
Stable |
| |
|
|
RATIONALE
Taiwan Ratings Corp.
Taiwan Ratings Corp. today affirmed its 'twA' long-term and 'twA-1' short-term counterparty credit ratings on Industrial Bank of Taiwan (IBT). The outlook on the long-term rating is stable. The ratings reflect IBT's niche positions in Taiwan's structured finance and syndication loan markets, satisfactory capitalization, and good asset quality. Counterbalancing factors include the bank's reliance on wholesales funding and the inherent volatility and higher risk of its venture capital business.
Outlook
The stable outlook reflects our expectation that IBT will continue its business diversification strategy and that growth will be manageable to maintain its capitalization at a satisfactory level. The ratings may be raised if the IBT group, of which the bank is a core member, can successfully manage its diversifying business portfolio and hence strengthen the stability of its profitability. The ratings may be lowered if the group's expansion plans put pressure on its asset quality and/or capitalization, or if its niche market positions deteriorate causing a decline in its overall profitability.
Standard & Poor's
On June 17, 2008, Standard & Poor's Ratings Services assigned its BBB-' long-term and 'A-3' short-term counterparty credit ratings to Industrial Bank of Taiwan (IBT). The outlook on the long-term rating is stable. At the same time, Standard & Poor's assigned its 'C' bank fundamental strength rating to IBT.
The ratings reflect the bank's niche positions in Taiwan's structured finance and syndicated loan markets, its satisfactory capitalization, and good asset quality. Counterbalancing factors include IBT's focus on wholesale funding, and the inherent volatility and higher risks of its venture capital business.
We acknowledge IBT's strengths from its status as a core member of the Industrial Bank of Taiwan group. The group's operations span corporate banking, venture capital, securitization, and securities. Since 2007, the group has started to penetrate the bill finance market, following its acquisition of a 28% stake in China Bill Finance Corp. (China BFC)--the third largest BFC in Taiwan. At the end of 2007, IBT had Taiwan dollar (NT$) 116 billion in stand-alone assets, which accounted for about 0.4% of the domestic banking industry's, but its consolidated assets were about 3x larger at NT$308 billion.
IBT has established a competitive presence in the structured finance and syndicated loan markets. In 2007, the bank ranked 13th in the domestic syndicated loan market in terms of total amounts, and has accounted for a quarter of the total structured finance deals arranged over the past four years.
IBT has satisfactory capitalization. The bank's consolidated adjusted total equity ratio stood at about 13% following its equity investment in China BFC, and this provides a good buffer against its exposure to high market risks.
The bank's asset quality is good and it has adequate reserves for its nonperforming loans. Its ratio of nonperforming assets stood at 1.3% at the end of 2007.
The regulated funding profile of IBT and that of several other group members has contributed to higher funding risks. According to IBT's industrial banking license, the bank can only take deposits from institutional clients. IBT's stand-alone ratio of loan to deposits was 110% at the end of 2007.
IBT's profitability is exposed to volatility because of the bank's venture capital business. The bank's stand-alone return on average assets ranged between 0.86% and 1.77% during 2005-2007.
Outlook: Stable
The stable outlook reflects Standard & Poor's' expectation that the IBT group will continue its strategy of diversifying its businesses and that it will manage growth while maintaining capitalization at a satisfactory level. The ratings could be raised if IBT successfully diversifies its business portfolio and strengthens profitability. The ratings may be lowered if the group's expansion plans put pressure on IBT's asset quality and/or capitalization, or if its niche market positions deteriorate, causing its overall profitability to decline.
Rating Report
|
| Document |
Language |
Format |
Size |
| 2008/06/16 TRC Rating Report |
English
|
PDF
|
122 kb |
| 2008/06/17 Standard & Poor's Rating Report |
English
|
PDF |
382 kb |
