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Moody's upgrades Kookmin Bank ratings on improved asset quality, capitalization

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Moody's upgrades Kookmin Bank ratings on improved asset quality, capitalization

Moody's raised KB Kookmin Bank's long-term deposit ratings and other ratings due to the bank's strengthened loan underwriting and resulting stable and benign asset quality, as well as the very high likelihood of support from the South Korean government.

The rating agency on Dec. 17 said it upgraded the bank's long-term foreign and local currency deposit ratings to Aa3 from A1; its long-term foreign currency senior unsecured rating to Aa3 from A1; and its baseline credit assessment and adjusted baseline credit assessment to "a3" from "baa1".

The outlook is stable.

At the same time, Moody's affirmed the bank's short-term foreign and local currency deposit rating at P-1; long- and short-term counterparty risk assessment at Aa3(cr)/P-1(cr); and, long- and short-term foreign and local currency counterparty risk ratings at Aa3 and P-1, respectively. It also affirmed the bank's foreign currency other short-term rating at (P)P-1.

Moody's noted that the ratings action also takes into account a sustained improvement in Kookmin Bank's asset quality and its strong capitalization. The bank's problem loans to gross loans ratio dropped to 0.5% as of September from 1.8% as of December 2013. Meanwhile, its common equity Tier 1 capital to risk-weighted assets ratio stood at 14.6% as of Sept. 30.

In taking the action, the rating agency said it also considered a sustained improvement in Kookmin Bank's profitability and its modest liquidity.

KB Kookmin Bank is a subsidiary of KB Financial Group Inc.