S&P lowers Kiwibank's credit rating
The downgrade returns Kiwibank to one level below the large Australian banks.
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State-owned Kiwibank and its parent New Zealand Post have had their credit ratings cut one notch from AA- to A+ (outlook stable) by international credit rating agency Standard & Poor’s.
Any changes to New Zealand Post's rating are automatically passed through to Kiwibank.
Standard & Poors says the rating cut reflects the group's growing reliance on the banking operations of Kiwibank and dwindling revenues from its postal services.
Standard & Poor's credit analyst Adrian Chow says Kiwibank is considered to be a significant contingent liability for the group.
"The downgrade reflects our view of the group's significant contingent exposure to its large and growing banking operations, Kiwibank, as well as our expectation that NZ Post's revenue and earnings will increasingly be focused on the group's more-competitive businesses such as parcels, express courier and financial services," Mr Chow says.
"The stable outlook reflects our expectation that NZ Post will continue to reduce costs and improve the efficiency of its mail delivery network to offset the ongoing decline in standard-letter volumes.
"At the current rating, we also expect the company to maintain funds from operations (FFO) to debt (excluding banking operations) of more than 20%."
The revised A+ rating returns Kiwibank to one level below the large Australian banks.
Since February, it had been at the same level at AA-.
Kiwibank’s short-term credit rating has also been lowered to A-1.
Its stand-alone credit profile is unchanged at BBB.
Kiwibank chief executive Paul Brock says the downgrade is disappointing, but Kiwibank remains among highest rated banks in the world.
Record earnings from Kiwibank helped push the group's underlying net profit after tax up 38% to $79.8 million in the year to June 30, but postal revenues still fell $17 million as the trend away from posting letters continued.
Georgina Bond
Tue, 30 Oct 2012
Tue, 30 Oct 2012
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S&P lowers Kiwibank's credit rating
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