Research: Rating Action: Moody’s confirms Standard Chartered Bank (Singapore) Limited’s A1 depository and issuer ratings with stable outlook

Singapore, September 22, 2022 — Moody’s Investors Service today affirmed the A1 long-term deposit and issuer rating of Standard Chartered Bank (Singapore) Limited (SCBSL). Moody’s also affirmed SCBSL’s a3 Basic Credit Assessment (BCA) and a3 Adjusted BCA.

The outlook remains stable, based on Moody’s forecast that SCBSL will maintain very strong liquidity and good solvency indicators.

The full list of confirmed ratings is provided at the end of the press release.

RATINGS RATIONALE

Moody’s affirmed SCBSL’s A1 rating because the bank will maintain its strong standalone credit profile despite the volatile macroeconomic environment in Singapore and Asia. SCBSL’s profitability will improve slightly thanks to higher interest rates and better financial performance of its recently acquired subsidiaries in Asia.

The risk on assets will remain under control with problem loans around 2% in 2022-2023 and a level of coverage close to 100%. The bank has traditionally displayed a high level of single-customer concentration in lending, with the associated credit risk somewhat offset by the good credit profile of most large borrowers and the short-term nature of large loans.

Moody’s expects the bank to maintain a healthy capital ratio of around 12-13% in terms of tangible equity (TCE) to risk-weighted assets. Capital will decrease slightly from current levels due to asset and dividend growth.

Funding and liquidity will remain very strong for SCBSL. The bank has a very high ratio of current account and savings account to total deposits and a moderate reliance on market funding, much of which is borrowed from related entities.

Moody’s is pricing in a very high likelihood of Singapore government support (Aaa stable) given the bank’s high systemic importance, leading to a two-notch uplift from the bank’s BCA a3 to depository and issuer ratings of A1.

Moody’s assumes that SCBSL is a strategically important subsidiary of Standard Chartered PLC (A3 stable), but the former’s ratings do not benefit from the improved affiliate support because its standalone creditworthiness is higher than that of the parent company.

FACTORS THAT MAY LEAD TO IMPROVEMENT OR DEGRADATION OF RATINGS

FACTORS THAT CAN LEAD TO IMPROVED RATINGS

We could upgrade SCBSL’s deposit and issuer ratings if three conditions are met: problem loans fall below 1%, return on assets exceeds 1.3%, and the TCE ratio remains permanently above 13%.

FACTORS THAT MAY LEAD TO LOWER RATINGS

We could downgrade SCBSL’s credit ratings if three conditions are met: problem loans exceed 4%, the TCE ratio drops below 12%, and return on assets drops below 0.4%.

The main methodology used in these ratings is the Methodology for Banks published in July 2021 and available on https://ratings.moodys.com/api/rmc-documents/71997. Otherwise, please see the Scoring Methodologies page on https://ratings.moodys.com for a copy of this methodology.

LIST OF AFFECTED RATINGS AND EVALUATIONS

..Issuer: Standard Chartered Bank (Singapore) Limited

…. Adjusted base credit assessment, confirmed a3

…. Basic credit assessment, confirmed a3

…. Long-term counterparty risk assessment, confirmed Aa3(cr)

…. Assessment of short-term counterparty risk, confirmed P-1(cr)

…. Long-term counterparty risk rating (foreign and local currency), confirmed Aa3

…. Short-term counterparty risk rating (foreign and local currency), confirmed P-1

…. Long-term issuer rating (foreign and local currency), confirmed A1, stable outlook

…. Short-term issuer rating (foreign and local currency), confirmed P-1

…. Long-term deposit rating (foreign and local currency), A1 confirmed, stable outlook

…. Short-term deposit rating (foreign and local currency), confirmed P-1

…. Short-term deposit note/CD program (foreign and local currencies), confirmed P-1

…. Commercial paper (foreign and local currency), confirmed P-1

….Outlook remains stable

REGULATORY INFORMATION

For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Moody’s rating symbols and definitions can be found at https://ratings.moodys.com/rating-definitions.

For ratings issued on a program, series, category/class of debt or security, this announcement provides certain regulatory information regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or under a program for which ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a media provider, this announcement provides certain regulatory information relating to the credit rating action on the media provider and each particular credit rating action for securities whose credit ratings are derived from the support provider’s credit rating. For the provisional ratings, this press release provides certain regulatory information relating to the provisional rating assigned, and to a final rating that may be assigned after the final issuance of the debt, in each case where the structure and conditions of the transaction n have not changed prior to the final rating being assigned in a way that would have affected the rating. For more information, please see the issuer/transaction page of the respective issuer at https://ratings.moodys.com.

For all relevant securities or rated entities receiving direct credit support from the lead entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action , the associated regulatory information will be that of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to the jurisdiction: Ancillary services, Disclosures to the rated entity, Disclosures to be provided by the rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued without modification as a result of such disclosure.

These notes are solicited. Please refer to Moody’s Policy for the Designation and Assignment of Unsolicited Credit Ratings available on its website. https://ratings.moodys.com.

The regulatory information contained in this press release applies to the credit rating and, if applicable, the outlook or rating revision relating thereto.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis are available at https://ratings.moodys.com/documents/PBC_1288235.

The worldwide credit rating on this credit rating announcement was issued by one of Moody’s affiliates outside the EU and is approved by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main. -le-Main 60322, Germany, in accordance with Article 4(3) of Regulation (EC) No 1060/2009 on credit rating agencies. Further information on the EU approval status and the Moody’s office that issued the credit rating can be found at https://ratings.moodys.com.

The worldwide credit rating on this credit rating announcement has been issued by one of Moody’s affiliates outside the UK and is approved by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the United Kingdom. . Further information on the UK endorsement status and the Moody’s office that issued the credit rating can be found at https://ratings.moodys.com.

Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and Moody’s legal entity that issued the rating.

Please see the issuer/transaction page at https://ratings.moodys.com for additional regulatory information for each credit rating.

Eugene Tarzimanov
VP – Senior Credit Officer
Financial Institutions Group
Moody’s Investors Service Singapore Pte. ltd.
71 Robinson Road #05-01/02
Singapore, 068895
Singapore
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

Alka Anbarasu
Associate General Manager
Financial Institutions Group
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

Release Office:
Moody’s Investors Service Singapore Pte. ltd.
71 Robinson Road #05-01/02
Singapore, 068895
Singapore
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

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