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Moody's upgrades Japan's Hiroshima Bank on loan performance, strong liquidity

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Moody's upgrades Japan's Hiroshima Bank on loan performance, strong liquidity

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.