TEXT-S&P: Sumitomo Mitsui Banking Corp. Straight Bonds Rated 'A+'
(The following was released by the rating agency)
TOKYO (Standard & Poor's) Jan. 11, 2013--Standard & Poor's Ratings Services today assigned its 'A+' rating to the U.S. dollar-denominated straight bonds issued by Sumitomo Mitsui Banking Corp. (SMBC; A+/Negative/A-1) (see list below).
The long-term counterparty credit rating on SMBC reflects the bank's consolidated financial profile, as well as the consolidated financial profile and market position of its parent company, Sumitomo Mitsui Financial Group Inc. (SMFG; A/Negative/A-1). This is because the businesses of SMBC and other group companies are highly related, and the holding company retains the ability to reorganize the entity and to reallocate capital within the group. In addition, given its importance in Japan's financial system, the long-term counterparty rating on SMBC benefits from a one-notch uplift from the stand-alone credit profile (SACP) on the bank, which excludes an extraordinary government support factor in a crisis.
SMFG maintains a strong competitive position in the markets in which it operates, which leads us to our "strong" assessment of its business position. With total assets of JPY143 trillion as of March 31, 2012, SMFG is a financial services bank holding company that ranks among the three largest banking institutions in Japan. SMBC has a large nationwide network and its revenue is well diversified by region and business lines, including traditional retail and commercial banking, brokerage and investment services, leasing, and consumer finance. SMFG's capital and earnings are "moderate" based on our expectation that the bank's risk-adjusted capital (RAC) ratio will remain in the 5.5%-6.5% range over the next two years. Our risk position assessment for SMFG is "adequate." SMFG's loan portfolio growth is likely to remain stagnant, while we expect its performance to stay stable. SMFG's funding is "above average" and its liquidity position is "strong," in our opinion. SMFG's large retail branch network provides it with a stable base of core deposits that it draws from to meet its funding needs. Its ratio of total loans to customer deposits was 67% as of March 31, 2012, according to our calculation, which indicates strong liquidity. The SACP on SMBC is 'a' reflecting the above factors and our 'a-' anchor SACP for a bank operating mainly in Japan.
We have factored one notch of government support into our long-term counterparty credit rating on SMBC, reflecting our expectation that the group has a "high likelihood" of receiving government support in a time of need. We view the group as having "high systemic importance" in Japan, which in our view is a "highly supportive" system.
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