S&P Global Ratings said Aug. 3 that it affirmed the counterparty credit rating of Sumitomo Mitsui Financial Group Inc. at A-/NR.
The rating agency also affirmed the counterparty credit ratings of the group's core units, Sumitomo Mitsui Banking Corp., Sumitomo Mitsui Banking Corp. Europe Ltd. Sumitomo Mitsui Banking Corp. (China) Ltd. and SMBC Nikko Securities Inc., at A/A-1.
At the same time, the counterparty credit ratings were removed from under criteria observation after S&P completed its criteria review on the ratings under the revised risk-adjusted capital framework methodology. The ratings were placed under criteria observation July 20.
The outlooks on the long-term counterparty credit ratings remain positive.
S&P believes that the group will continue to improve its capital level relative to risk-weighted assets over the medium term. The rating agency also expects the group to increase its risk-weighted assets modestly and to accumulate retained earnings steadily to meet the regulatory requirements of the Basel Committee on Banking Supervision.
The rating agency could upgrade the ratings if Sumitomo Mitsui Financial is able to maintain a risk-adjusted capital ratio of 7% or higher. The group's risk-adjusted capital ratio remained above 7% as of the end of September 2016 under S&P's revised criteria.
Meanwhile, the outlook could be lowered if the rating agency revises its anchor for Japan's banking industry downward, or if the group materially expands its exposure to countries and regions with higher economic risk than Japan.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.