Perth-based financial services group Home Building Society Ltd has been awarded a BBB long-term credit rating by Standard & Poor's, with the ratings agency approving of its strong asset quality and good risk management.
Perth-based financial services group Home Building Society Ltd has been awarded a BBB long-term credit rating by Standard & Poor's, with the ratings agency approving of its strong asset quality and good risk management.
The full text of an S&P announcement is pasted below
Standard & Poor's Ratings Services said today it had assigned its long-term issuer credit rating of 'BBB' on Western Australia (WA) based Home Building Society Ltd. (Home). The outlook is stable. The rating reflects the building society's strong asset quality, supportive management team, and good risk management. Moderating the strengths are Home's geographic concentration in WA, relatively small capital base to support unexpected losses, and higher growth appetite compared with domestic peers'.
"Home's low-risk loan portfolio underpins the building society's credit quality," said Standard & Poor's credit analyst Sharad Jain. Housing loans that are well secured by mortgages formed 89% of Home's A$2.3 billion loan book at Dec. 31, 2006. Home's credit losses and nonperforming assets have remained extremely low compared with domestic and international peers'. Credit risk management is supplemented by very conservative underwriting policies and practices.
Home is the largest building society in WA with total assets of A$2.9 billion at Dec. 31, 2006. Engaged primarily in home-lending business, Home's asset base and earnings have more than doubled since fiscal 2005, due partly to Home's merger with StateWest Credit Society in 2006. Nevertheless, compared with most other higher rated financial institutions in Australia, Home's competitive position remains moderate and limited by its geographic concentration in WA.
Standard & Poor's stable rating outlook on Home factors in the expectation that the residual integration risks following the merger between Home and StateWest Credit Society will be managed well and that Home's growth aspirations will not significantly weaken the building society's financial profile.
The full text of a Home Building Society announcement is pasted below
Home Building Society Ltd (ASX: HME) is pleased to announce it has received an investment grade BBB/Stable/A-2 credit rating by the agency Standard & Poor's.
Standard & Poor's said the stable long-term credit rating was assigned to Home for its strong asset quality, supportive management team, and good risk management.
Home Managing Director Greg Wall said the credit rating reflected the company's growing position in the market.
"We are delighted to have been assigned this credit rating and to be recognised by such a reputable and established agency as Standard & Poor's," said Mr Wall.
"We see this rating as a reflection of Home's strong and consistent growth, most recently including the merger with StateWest Credit Society."
In its rating report released today, Standard & Poor's highlighted the progress Home has made since the merger and the effectiveness with which it has been managed.
"It is pleasing to have this independent endorsement of our strategy and merger integration," said Mr Wall.
"The rating will assist us with our deposit growth strategies here in Western Australia by expanding our reach in the professional depositor market, which will in turn reduce our funding costs and, over time, make Home a more profitable financial institution."
"In addition, the credit rating allows many institutions and organisations who require such a rating under their individual investment charter to Invest in Home's competitive range of deposit products. It also provides additional confidence to all Home's investors."
A credit rating is Standard & Poor's opinion of the general credit worthiness and ability to pay its financial obligations based on relevant risk factors.
