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Moody's affirms ratings of 5 New Zealand banks

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Moody's affirms ratings of 5 New Zealand banks

Moody's said April 5 that it affirmed the ratings of fiveNew Zealand banks.

The banks are ANZ Bank New Zealand Ltd., , , andKiwibank Ltd.

The rating agency affirmed both the deposit ratings andissuer ratings of the five banks at Aa3/P-1. The baseline credit assessmentsand adjusted baseline credit assessments of ANZ Bank, ASB Bank, Bank of NewZealand and Westpac New Zealand were affirmed at "a3/a1," while thoseof Kiwibank were affirmed at "baa2/aa3."

The ratings outlook for each bank remains stable.

The rating affirmations reflect the five banks' strongfinancial profiles, Moody's said, citing their strong asset quality, improvedprofitability and robust capital. The rating agency added that these favorablecharacteristics provide the banks with a strong buffer to withstand thestresses arising from a potentially more challenging operating environment infiscal 2016-2017.

The stable ratings outlook reflects Moody's expectation thatany weakening in the banks' fundamentals due to a more challenging operatingenvironment will be off a very strong base.

A downgrade in the banks' ratings could result from weakenedfundamentals or deterioration in their financial metrics, the rating agencysaid. It added that an upgrade in their ratings is unlikely given the operatingenvironment's potential to become more challenging.

Moody's also lowered the asset risk sub-factor of itsbanking system outlook on New Zealand to deteriorating from stable to reflectthe challenges in the operating environment and expectations for increasedasset quality stress in the dairy sector.

However, the overall outlook on the sector remainsstable, reflectingthe strong buffers in the banks' financial profiles.