TSB Bank credit outlook raised to 'stable' by S&P on reduced property market risk

Kevin Murphy, TSB Bank Chief Executive

TSB Bank, the Taranaki community-owned bank, had its credit outlook raised to "stable" from "negative" by ratings agency Standard & Poor's because of its reduced exposure to risks in the residential property market.

"The revision of the outlook from negative to stable reflects our belief that increasing risks relating to asset price inflation in the property market and high consumer leverage across New Zealand no longer represent material risks for the bank," S&P credit analyst Andrew Mayes said in a statement.

TSB has only a "modest" exposure to the high property price inflation markets of Auckland and Christchurch and a low loan-to-value ratio position across its lending portfolios, S&P said.

"As a result, we believe the bank has a substantial buffer for absorbing a modest retrace in residential property prices without a resultant increase in credit costs," S&P said. "The stable outlook reflects our belief that the bank's asset-quality would not be materially negatively affected by a limited correction in New Zealand's property market."

S&P affirmed its BBB+ long-term and A2 short term investment grade credit ratings for the bank.


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