(The following statement was released by the rating agency)
TAIPEI/SYDNEY, March 25 (Fitch) Fitch Ratings has affirmed
Hwa Bank's (CHB) ratings, including its Long-Term Issuer Default
Rating (IDR) at
'BBB+'. The Outlook is Stable. A full list of rating actions is
at the end of
this rating action commentary.
KEY RATING DRIVERS - IDRS, NATIONAL RATINGS, SUPPORT RATING AND
CHB's IDRs and National ratings are driven by its Support Rating
Support Rating Floor (SRF), which reflect the high probability
of support from
the state given its importance. This is evident in the state's
ownership (currently 18.6%) of the bank, its legacy as a leading
terms of branch network), as well as its place among the banks
with the 10
largest market shares in deposits and loans.
The Stable Outlook reflects Fitch's expectation of no
diminishing of support
from the state in terms of ability or propensity.
RATING SENSITIVITIES - IDRS, NATIONAL RATINGS, SUPPORT RATING
AND SUPPORT RATING
The bank's IDRs, National ratings, SR and SRF are sensitive to
any change in
assumptions around the ability or propensity of the state to
support to the bank. This would most likely be manifested in a
Taiwan's sovereign rating (A+/Stable) or a move towards full
KEY RATING DRIVERS - VIABILITY RATING
The bank's Viability Rating (VR) primarily reflects its strong
established franchise, particularly in the SME segment, but also
growing capital position despite modest profitability. Like many
Taiwanese banks, CHB also enjoys a solid funding and liquidity
the concentration of loans with the bank's 10 largest borrowers
high compared with its peers, at 16% of total loans, it is on a
and the loans are mostly quality secured exposures or extended
RATING SENSITIVITIES - VIABILITY RATING
Any unexpected deterioration of large credits leading to
impairment of capital
or elevation in risk-taking, without enhancement of its
trigger a VR downgrade. A VR upgrade could occur if CHB can
profitability in line with higher-rated peers while maintaining
quality and without increasing risk appetite. This would
enhance the prospects
of even stronger internal capital generation.
KEY RATING DRIVERS - SUBORDINATED DEBT
CHB's subordinated debt is rated one notch below its National
reflecting its subordinated status and the absence of any
loss-absorption mechanism (such as coupon deferral under
It has thus been affirmed due to the affirmation of CHB's
RATING SENSITIVITIES - SUBORDINATED DEBT
Any rating action on CHB's National Long-Term rating is likely
to trigger a
similar move in its debt ratings.
The rating actions are as follows:
Long-Term IDR affirmed at 'BBB+'; Outlook Stable
Short-Term IDR affirmed at 'F2'
National Long-Term rating affirmed at 'AA-(twn)'; Outlook Stable
National Short-Term rating affirmed at 'F1+(twn)'
Viability Rating affirmed at 'bbb'
Support Rating affirmed at '2'
Support Rating Floor affirmed at 'BBB+'
Subordinated bonds affirmed at 'A+(twn)'
+886 2 8175 7602
Fitch Ratings Limited, Taiwan Branch
Suite 1306, 13F, Tun Hwa N. Rd., Taipei
Jenifer Chou, CFA, FRM
+886 2 81757605
+61 2 8256 0310
Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935,
Additional information is available on www.fitchratings.com
Applicable criteria, 'Global Financial Institutions Rating
Criteria', dated 1
January 2014, 'National Scale Ratings Criteria', dated 30
October 2013 are
available at www.fitchratings.com.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
National Scale Ratings Criteria
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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
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