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S&P upgrades Taiwan Business Bank on improved capitalization

S&P Global Ratings upgraded Taiwan Business Bank Co. Ltd.'s long-term issuer credit rating given the bank's improved capitalization following its NT$8 billion hybrid capital issuance.

The bank's long-term issuer credit rating was raised to BBB+ from BBB, with a stable outlook. At the same time, the rating agency affirmed the bank's A-2 short-term rating and "cnA+/cnA-1" Greater China regional scale ratings.

S&P said the bank's capitalization will remain at an adequate level in the coming two years, as represented by a risk-adjusted capital ratio of 7% to 10%. Further, the ratings action reflects the rating agency's view that the bank is expected to maintain its profitability to support capital growth.

Taiwan Business Bank will have industry-average loan growth, and its asset quality will not deteriorate significantly despite its business focus on small and midsize loans, S&P noted.

S&P may downgrade the bank if it cannot sustain its risk adjusted capital ratio above 7% or if its moderate systemic importance in Taiwan weakens. On the other hand, the rating agency considers the likelihood of an upgrade as remote over the next two years.

As of Jan. 24, US$1 was equivalent to NT$31.35.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.