TEXT-Fitch affirms large regional bank ratings following peer review
Oct 30 - Fitch Ratings has completed a peer review of the following 14 rated large regional banks: BB&T Corporation (BBT), Capital One Finance Corporation (COF), Comerica Incorporated (CMA), Fifth Third Bancorp (FITB), Huntington Bancshares Inc (HBAN), Keycorp (KEY), M&T Bank Corporation (MTB), PNC Financial Services Group (PNC), Regions Financial Corporation (RF), SunTrust Banks Inc. (STI), US Bancorp (USB), UnionBanCal Corporation (UBC), Wells Fargo & Company (WFC), and Zions Bancorporation (ZION). Refer to Wells Fargo's individual release for a discussion of rating actions taken on WFC. RATING ACTION AND RATIONALE All ratings were affirmed. CMA's ratings were affirmed at 'A', but the Rating Outlook remains Negative reflecting financial performance that continues to lag regional peers. Conversely, HBAN's, RF's, ZION's Rating Outlooks were revised to Positive from Stable. HBAN's Outlook was revised due to improvements in its risk profile, earnings performance, and capital profile. RF's Outlook was revised given an improving overall risk profile with moderating asset quality and the maintenance of a solid capital and liquidity positions. ZION's Outlook was revised to Positive reflecting improving profitability, improving asset quality ratios, and on balance modestly improved capital ratios. FITB's Rating Outlook remains Positive, supported by its strong earnings profile, somewhat offset by still elevated levels of problem assets. The Issuer Default Ratings (IDRs) span a relatively disperse set of ratings from higher rated WFC and USB (both 'AA-') to RF and ZION (both rated 'BBB-'). The majority of this peer group is rated 'A-' with a Stable Rating Outlook. The peer group is generally comprised of three groupings of banks. The first group is comprised of USB, WFC, BBT and PNC, whose ratings are 'AA-' or 'A+', supported mainly by strong earnings profiles or moderate risk profiles. These companies have demonstrated a strong level of consistency through the most recent crisis, and stable earnings performance. Although non-performing assets (NPAs) and/or net charge-offs (NCOs) increased for these companies, the companies' capital profiles and reserves were adequate to absorb the associated losses. The second group includes a much larger diverse set of companies whose credit profiles includes various strengths, offset by some attributes that keep them from being in the top segment. Ratings in this grouping span from 'A' to 'BBB+'/Rating Outlook Positive. Companies in this grouping include UBC, COF, CMA, FITB, KEY, MTB, and HBAN. Some of these companies continually report solid earnings, namely FITB but the ratings still incorporate elevated credit risk, or in the case of MTB, strong risk-adjusted earnings are offset by a relatively low capital position. While other companies have strong capital levels, KEY, UBC and CMA as examples, but whose core earnings profiles lag the peer group. The last group of large regionals includes STI, RF, and ZION, companies that have lagged the large regional bank group during the financial crisis in terms of earnings and asset quality, but recently have shown improving trends. These banks are rated from 'BBB+' to 'BBB-'/Rating Outlook Positive.U.S. Banks: Rationalizing the Branch Network (Witness the Incredible Shrinking Branch Network)U.S. Banks: Mortgage Representations and Warranties (Banks Increase Reserves; Uncertainty Remains)Global Financial Institutions Rating CriteriaRating FI Subsidiaries and Holding CompaniesTreatment of Unrealized Losses in U.S. Bank Capital Rule Proposal (Pro-Cyclical Capital Policy to Create Greater Capital Volatility for Banks)Basel III: Return and Deleveraging PressuresRating Bank Regulatory Capital and Similar SecuritiesU.S. Banks â€” Sovereign Support: When Does it End -- Amended
- North Korea says Kim's powerful uncle dismissed for 'criminal acts'
- Thai PM calls snap election, protesters press on |
- Protesters fell Lenin statue, tell Ukraine's president 'you're next'
- Singapore hit by rare outbreak of rioting, 27 arrested |
- Venezuela's Maduro to raise pressure on business after local vote