Moody's changed the outlook on South Korea's Daegu Bank Ltd. to negative after completing a review for downgrade.
The rating agency said in a May 17 report that it also confirmed the bank's A2 long-term local and foreign currency deposit, and foreign currency senior unsecured ratings. The lender's baseline credit assessment, or BCA, was also confirmed at "baa1."
In November 2017, Moody's placed the bank's ratings on review for downgrade after its parent DGB Financial Group Co. Ltd. agreed to purchase a controlling stake in HI Investment & Securities Co. Ltd. from a unit of Hyundai Heavy Industries Co. Ltd.
Also, the confirmation of the bank's BCA reflects the lower asset risk on the improving operating environment of its home region and slower loan growth since 2016, as well as its weak capitalization, strong and stable profitability, and stable funding and liquidity profiles.
A rating upgrade is unlikely in the near term given the negative outlook.
However, Moody's would consider revising the outlook to stable if there is positive pressure on the bank's BCA, though it could also lower its ratings if the BCA is downgraded.
