Moody's upgraded the ratings of Japan's Hiroshima Bank Ltd. due to the bank's strong loan performance, improving capitalization and strong liquidity.
The rating agency said March 9 that it raised the bank's long-term deposit ratings to A2 from A3, with a stable outlook. It also upgraded the bank's short-term deposit rating to Prime-1 from Prime-2, its baseline credit assessment and adjusted baseline credit assessment to "baa1" from "baa2."
Moody's said the bank's strong loan performance is indicated by 1.19% non-performing loan to gross loans ratio as of Dec. 31, 2017, and low credit losses. Meanwhile, the bank's tangible common equity was 10.9% at the end of 2017, more than a full percentage point higher than in December 2015, the agency added.
Hiroshima Bank's relatively efficient operations support its stable profitability, the agency said, noting that the bank's operating expense as a percentage of its earning assets is among the lowest of its rated peers in Japan. Further, the bank's strong deposits support its combined liquidity profile.
