Bank’s credit rating under review

The review follows the implementation of Moody’s new global bank rating methodology.

This week the credit rating agency flagged the possibility that Heritage Bank’s rating will reduce from A3/P2 to Baa1/P2 at the end of a three-month review period.

The proposed change to Heritage’s rating was one of multiple rating actions announced following the publication of Moody’s new bank rating methodology.

Heritage Bank CEO John Minz said the flagged reduction was the result of the new methodology, rather than any change to Heritage’s business operations or circumstances.

“Heritage’s business remains strong and stable,” Mr Minz said. “In fact, we are in an expansion phase of the business and have targeted balance sheet growth this financial year,” he said.

“With that in mind, we have enjoyed record levels of mortgage lending in recent months.

“The proposed ratings reduction is due to the change in Moody’s methodology, not any change to the fundamentals of our business.”

Heritage posted a profit after tax of $16.2 million for the six months to 31 December – down 9.5 per cent on the corresponding prior period.

Loan approvals increased 20.7 per cent over the period on the back of the bank’s rate cutting while its net interest income remained unchanged.