Standard & Poor's has upgraded its long-term credit rating on Heartland Bank a notch to BBB saying the bank's business has strengthened over the past three years.
The new S&P rating comes with a negative outlook, however, which the credit rating agency says is due to the "negative economic risk trend" it has assigned to the New Zealand banking system and its concerns about New Zealand's economic imbalances (see more on this here).
S&P previously had a BBB- rating on Heartland, the lowest of its investment grade ratings, with a developing outlook.
Heartland has a second credit rating, from Fitch Ratings, which is BBB- with a stable outlook.
“The rating upgrade reflects our view that Heartland’s business position strengthened over the past three years upon the bank’s transition toward its core niche markets and away from non-core assets,” said S&P credit analyst Nico DeLange.
“In our view the improvement in Heartland’s business position is evidenced by the deepening of the bank’s position in specialist target market segments such as vehicle asset finance, invoice financing, livestock financing, and reverse mortgage loans, and the progress made by Heartland to exit its non-core property portfolio as well as the gradual decline in Heartland’s residential mortgages lending portfolio (also a non-core lending area for the bank), where levels of contestability is significantly higher," DeLange added.
S&P affirmed its short-term Heartland rating at A-3. See credit ratings explained here.
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