March 3, 2017 / 2:30 AM / 9 months ago

Fitch Affirms Christian Savings at 'B+'; Outlook Positive

(The following statement was released by the rating agency) SYDNEY, March 02 (Fitch) Fitch Ratings has affirmed Christian Savings Incorporated's (formerly known as New Zealand Baptist Savings & Development Society Incorporated) Long-Term Issuer Default Rating (IDR) at 'B+' with a Positive Outlook and its Short-Term IDR at 'B'. A full list rating action is at the end of this commentary. KEY RATING DRIVERS IDRS AND VIABILITY RATING The affirmation of Christian Savings' IDRs and Positive Outlook reflects ongoing improvements in its risk appetite and Fitch's expectation that Christian Savings will continue to strengthen risk controls and underwriting over the next year. Christian Savings has also strengthened its management structure with the hiring of a CFO who appears suitably qualified based on previous experience. Despite the improvements, Christian Savings' overall risk appetite remains weaker than other small New Zealand-based lenders; reflective of its business model. Fitch does not consider Christian Savings to be an aggressive lender, although its business model and underwriting standards could be viewed as being of higher risk than other New Zealand lenders. Its core service is providing loans to churches; a segment traditional lenders tend to perceive as higher-risk. Christian Savings' loan pricing and terms are comparable with residential mortgages, reflecting its charitable lender purpose. Low loan/value ratios across its portfolio mitigate some of its risk. Christian Savings has weak capitalisation in absolute terms and relative to other small Fitch-rated New Zealand-based lenders, leaving its capital base more susceptible to shocks that lead to impairments or losses. Christian Savings' low internal capital generation reflects its business model, although its ability to raise additional capital has improved. Fitch expects capitalisation to remain stable in 2017, with strong loan growth offsetting its capital raising efforts. Christian Savings' asset quality is also likely to remain stable; characterised by low loan impairment and write-off levels that reflect its underwriting and well-collateralised position. However, Fitch believes Christian Savings' low impairment ratios do not fully reflect its credit and concentration risk. Its 10-largest exposures accounted for around 40% of total loans at end-January 2017, which is significantly higher than for other New Zealand lenders. Christian Savings' lending activities are fully funded by a combination of church and household deposits. Household deposits account for about half of total deposits and Fitch expects reinvestment rates to remain at a high 80% in 2017. Christian Savings' loan/deposit ratio is ahead of peers and it has a sound liquidity position, although it does not have access to the Reserve Bank of New Zealand repo facility. SUPPORT RATING AND SUPPORT RATING FLOOR Christian Savings' Support Rating and Support Rating Floor are based on Fitch's view that while support from the New Zealand sovereign (AA/Stable) is possible, it cannot be relied upon. Christian Savings is not captured under the Open Bank Resolution scheme, which allows for the imposition of losses on depositors and senior debt holders when a deposit-taking institution fails. However, Fitch sees the existence of such a framework as an indication of a lower propensity for the sovereign to support its banks. RATING SENSITIVITIES IDRs AND VIABILITY RATING An upgrade in Christian Savings' IDRs and Viability Rating will be driven by further improvements in its risk appetite or meaningful increase in capitalisation. Fitch expects positive trends in loan and asset growth, which should broaden Christian Savings' customer base and exposure type, to lower it concentration risk over the next year. The Positive Outlook on the rating could be revised to Stable if Christian Savings loses momentum in its growth prospects or if growth is achieved at the expense of a weaker risk appetite or underwriting standards. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Rating and Support Rating Floor are sensitive to any change in assumptions around the propensity or ability of the New Zealand government to provide timely support. The rating actions for Christian Savings are as follows: Long-Term Foreign-Currency IDR affirmed at 'B+'; Outlook Positive Short-Term Foreign-Currency IDR affirmed at 'B' Viability Rating affirmed at 'b+' Support Rating affirmed at '5' Support Rating Floor affirmed at 'NF' Contact: Primary Analyst Jack Do Director +61 2 8256 0355 Fitch Australia Pty Ltd Level 15, 77 King Street, Sydney NSW 2000 Secondary Analyst Andrea Jaehne Director +61 2 8256 0343 Committee Chairperson Parson Singha Senior Director +66 2108 0151 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1019992 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below