Powered by MOMENTUM MEDIA
subscribe to our newsletter

Suncorp’s loan book repositioning reflected in new ratings

Moody’s Investor Service has forecast improved profitability for Suncorp Bank after it raised the bank’s baseline credit assessment and affirmed its ratings.

The credit rating agency adjusted Suncorp’s baseline credit assessment from baa2 to baa1, and affirmed the bank’s long-term A1 issuer rating and short-term issuer rating of Prime-1.

Moody’s vice president and senior analyst Frank Mirenzi said lower non-performing loans, higher capital levels and a lower reliance on wholesale funding underline the improvements in the strength of Suncorp Bank’s balance sheet.

“The bank’s stronger balance sheet has lowered its risk profile and will also support [Suncorp’s] profitability outlook,” he said.

Moody’s said it expects favourable asset quality trends to persist as Suncorp has repositioned itself to focus on lower-risk residential mortgage lending and small business products.

Advertisement
Advertisement

“This strategy should result in a much lower risk profile than recent history, which will further underpin asset quality improvements and lead to improved profitability through lower impaired loan charges,” Moody’s said.

The agency believes Suncorp’s profit outlook is much improved, and the bank should be able to generate returns in line with Australia’s other regional banks.

“Moreover, lower funding costs have improved [Suncorp’s] net interest margin, which will help support future profitability,” Moody’s said.

As part of the larger Suncorp group, Moody’s added that the bank should be able to leverage the group's broader infrastructure, resources and procurement pricing power.

“Accordingly, its cost-to-income ratio should improve from the current 52.19 per cent as benefits of scale are realised,” it said.

PROMOTED CONTENT


Suncorp Bank’s head of intermediaries, Steven Degetto, revealed to Mortgage Business last month that the bank had undertaken a program over the last two years to reposition its mortgage portfolio, with a focus on building strong risk management capabilities.

Suncorp’s loan book repositioning reflected in new ratings
mortgagebusiness

Latest News

The proposed acquisition of Westpac PNG and Westpac Fiji by Kina will no longer proceed, it has been confirmed. ...

The listed bank has kicked off a strategic review of its company, after reportedly receiving interest from external parties. ...

Developers have called the government to act against a decline in apartment construction in NSW, saying it could threaten housing affordabi...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.