Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's affirms the Aa3 deposit ratings of BOC (HK), Nanyang and Chiyu

 The document has been translated in other languages

07 May 2013

NOTE: On May 21, 2013, the press release was revised as follows: The first sentence of the second paragraph was amended and now reads as follows: BOC (HK)'s bank financial strength rating (BFSR) was affirmed at C+, which maps to baseline credit assessment (BCA) of a2. The fourth paragraph was amended and now reads as follows: Chiyu's BFSR was affirmed at C, which maps to BCA of a3, and the outlook on all its ratings remains stable. Revised release follows.

Hong Kong, May 07, 2013 -- Moody's Investors Service, ("Moody's") has today affirmed at Aa3 the long-term foreign and local currency deposit ratings of Bank of China (Hong Kong) Limited (BOC (HK)), Nanyang Commercial Bank Limited (Nanyang), and Chiyu Banking Corporation Limited (Chiyu). The banks' short-term deposit ratings are also affirmed at P-1.

BOC (HK)'s bank financial strength rating (BFSR) was affirmed at C+, which maps to baseline credit assessment (BCA) of a2. Meanwhile, its foreign currency senior unsecured debt rating is affirmed at Aa3, foreign currency subordinated debt rating at A1, foreign currency senior unsecured MTN obligation rating at (P)Aa3, and foreign currency subordinated MTN obligation rating at (P)A1. The outlook on all of BOC (HK)'s long-term ratings remains stable.

Nanyang's BFSR/BCA have been adjusted down by one notch to C/a3 from C+/a2. The outlook on both Nanyang's deposit ratings and BFSR has been revised to negative from stable. The downward adjustment on Nanyang's BCA and the negative outlook reflect the bank's increasing exposures to riskier mainland borrowers.

Chiyu's BFSR was affirmed at C, which maps to BCA of a3, and the outlook on all its ratings remains stable.

RATINGS RATIONALE

Long-term ratings

The affirmation of BOC (HK)'s Aa3 long-term deposit ratings with stable outlook reflects its strong financial standing with solid capitalization, good asset quality, strong liquidity profile, and good profitability. The deposit ratings factor in very high likelihood of parental support from Bank of China Ltd (deposits A1 stable, BFSR D/BCA ba2 stable) and high likelihood of systemic support from the Hong Kong government (Aa1 stable). BOC (HK) is of strategic importance to its parent as it is the parent's flagship overseas operation. BOC (HK) has close business relationship with domestic and overseas branches of Bank of China Ltd. BOC (HK) is also a systemically important bank in Hong Kong with 13% market share of local loans.

Nanyang and Chiyu's deposit ratings are aligned with those of their parent BOC (HK). Moody's expects BOC (HK) to provide timely support to its two bank subsidiaries in the event of need..

Standalone credit profile of BOC (HK)

BOC (HK) has a well-established franchise and branch network in Hong Kong. It is the second largest bank and one of three note-issuing banks in the territory. The bank's strong market position and deposit franchise lead to low funding costs and strong profitability.

Increasing economic integration between Hong Kong and mainland China and growing cross-border trade and investments should create more opportunities for BOC (HK). Nevertheless, increasing mainland exposures also entail potential risks given imbalances in China's investment-driven and relatively less mature economy.

BOC (HK) has maintained strong asset quality metrics since 2009 with impaired loans consistently below 0.4% of gross loans. Its capital adequacy has remained strong over time, with its tier-1 ratio consistently above 11%. The bank also has a very strong liquidity profile due to its strong franchise with a large branch network. Despite prevailing low interest rates, profitability has remained strong thanks to low funding costs, good operating efficiency, and low credit costs.

BOC (HK)'s BCA is several notches higher than that of its parent, Bank of China whose BFSR/BCA are D/ba2. Moody's incorporates seven notches of systemic support from the Chinese government in the A1 long-term deposit rating of Bank of China. Moody's judges that stand-alone credit issues at Bank of China would likely be dealt with through decisive support from the Chinese government, with the result that there would be limited negative impact on the franchise or financial profile of BOC (HK). Moreover, Moody's assumption is that systemic support from the Chinese government for Bank of China would be allowed to flow through to BOC (HK) given that financial stability in Hong Kong would likely be a concern for the mainland government.

Standalone credit profile of Nanyang

Nanyang's BCA of a3 reflects its sound financial profile, including its strong capital adequacy, good asset quality, and good operating efficiency. These positives are offset by its relatively small franchise in Hong Kong and risks associated with its ongoing expansion in mainland China.

The bank's mainland exposures have increased strongly since 2009 when its parent injected its mainland branches and assets into the bank. Loans for mainland customers accounted for around 45% total loans at end-2012. Although the bank started out serving Hong Kong customers operating on the mainland, it increasingly serves more local domestic mainland customers through its mainland operation. The negative outlook on the bank's BFSR reflects the likelihood of further weakening in the bank's risk profile stemming from future increases in mainland exposures.

Nanyang has maintained good asset quality metrics in recent years, with impaired loan ratios consistently below 0.4% since 2009. Nevertheless, the impaired loans ratio rose to 0.37% from 0.14% during 2012 largely due to weakened financial standing of a mainland solar panel producer. Further increases in the bank's mainland exposure will render the bank more susceptible to adverse developments in mainland China. Strong loan growth may also weaken the bank's current solid capitalization. Its tier-1 ratio at end-2012 was 15.1%.

Nanyang has historically maintained a sound liquidity profile, with its funding consisting largely of stable customer deposits. The bank's mainland operation has a weaker funding profile due to its less developed retail franchise, although the bank benefits from its affiliation with BOC which helps drive deposit growth. The bank's three-year average return on average risk-weighted assets was 1.6%, slightly lower than the average of its Hong Kong peers. Moody's expects the bank to report slightly improved profitability in 2013.

Standalone credit profile of Chiyu

Chiyu's BCA of a3 reflects its strong capitalization and profitability, very good asset quality, and sound liquidity profile. Nevertheless, the bank's small size and limited franchise weigh on its ratings.

Although loans for mainland customers accounted for 17% of overall exposures, which raises our concerns on the bank's future asset quality, a 17% decline in such exposures between 2010 and 2012 eased such concerns. The bank retains a cautious approach in its mainland expansion.

The bank maintained very solid tier-1 ratio of 19.7% and total capital adequacy ratio of 20.4% at end-2012. Moody's expects the bank to maintain its strong capital position given its robust internal capital generation capability and expected modest growth. The bank also maintains a sound liquidity profile with a low loan-to-deposit ratio of 58% and a good funding profile that is centered on retail deposits.

Moody's expects Chiyu to maintain its strong level of profitability. High margins from its small-and medium-sized enterprise business, low operating expenses, and low credit costs all underpin the bank's sustained good profitability. The bank leverages resources, product development and IT support from its parent. Its three-year average return on risk-weighted asset was 3.1% between 2010 and 2012, well above the 1.8% average for its rated peers.

What Could Change the Rating - Up / Down

BOC (HK)

BOC (HK)'s deposit rating is high relative to global peers and is unlikely to be upgraded in the near term. Its baseline credit assessment could be adjusted higher if the bank maintains strong capitalization with Tier-1 CAR of 11% or above, expands its mainland-related business prudently, and increases contribution from low risk and stable sources of income.

BOC (HK)'s deposit rating and baseline credit assessment could be adjusted down if signs of material deterioration in asset quality emerge with impaired loans / gross loans ratio rising by 1% point or more, or if strong credit growth outstrips internal capital generation, leading to a decline of the Tier-1 ratio to below 10%.

Nanyang

Nanyang's deposit rating incorporates parental support from BOC (HK), whose deposit rating in turn incorporates support from Bank of China and the Hong Kong government. The bank's deposit rating is very high and is unlikely to be upgraded further. The bank's standalone credit assessment is also high relative to its size, and is unlikely to be raised.

Nanyang's deposit ratings could be downgraded if the likelihood of parental support diminishes. The standalone assessment could be adjusted lower if the bank cannot maintain its asset quality and capital adequacy amid ongoing expansion, notably in mainland China. Further expansion in its mainland exposures will render the bank more vulnerable to adverse economic developments in China and may trigger a downward adjustment in its standalone assessment and deposit rating.

Chiyu

Chiyu's deposit rating incorporates parental support from BOC (HK), whose deposit rating in turn incorporates support from Bank of China and the Hong Kong government. The deposit rating is very high and is unlikely to be upgraded further.

The bank's a3 BCA is high considering its limited franchise, and is unlikely to be raised.

Chiyu's deposit rating and BCA could be adjusted downward if the bank engages in rapid expansion at the expense of asset quality and capital adequacy. An important assumption underlying the current rating and BCA is the bank's ability to maintain a very strong financial profile, which offsets the credit weakness that stems from its small size and modest franchise.

Therefore, any deterioration in its strong financial fundamentals would lead to a downward adjustment on its BCA. A reduction in the Tier- 1 ratio to below 14% and/or an increase in impaired loans above 1.5% of total loans could lead to such an adjustment.

All three banks are headquartered in Hong Kong and reported total assets as follows:

BOC (HK): HKD1,769 billion (USD228 billion) as of 31 Dec 2012

Nanyang: HKD252 billion (USD32 billion) as of 31 Dec 2012

Chiyu: HKD48 billion (USD6.2 billion) as of 31 Dec 2012

The principal methodology used in these ratings was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

The first name below is the lead rating analyst for this Credit Rating and the last name below is the person primarily responsible for approving this Credit Rating.

Sonny Hsu
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Stephen Long
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Moody's affirms the Aa3 deposit ratings of BOC (HK), Nanyang and Chiyu
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Moodys.com