S&P Global Ratings affirmed the long- and short-term issuer credit ratings on Land Bank of Taiwan Co. Ltd. at A- and A-2, respectively, with a stable outlook.
The rating agency said May 26 that it also affirmed the lender's Greater China regional scale at "cnAA/cnA-1". S&P also revised its capital and earnings assessment on the bank to adequate from moderate and raised its stand-alone credit profile to "bbb" from "bbb-".
The ratings reflect the bank's high importance to the Taiwanese government, as well as its good domestic franchise and above-average funding profile. S&P expects the government to provide ample support to the bank in times of financial stress.
Land Bank of Taiwan's stand-alone credit profile has strengthened over the past 12 months owing to its improving capitalization, S&P noted.
The stable outlook reflects the expectation that the lender will continue to benefit from potential extraordinary support from the government, and S&P's view that the bank will manage its growth and the risks emerging from its construction loan business.
A deterioration in the bank's capitalization accompanied by weakening risk control may lead to a downward ratings action. Conversely, the lender's ratings may be upgraded if its risk-adjusted capital ratio improves to above 10%. However, S&P expects this scenario to be unlikely in the next two years.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.