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Moody's assigns 1st-time ratings to Australia's G&C Mutual Bank

Moody's assigned first-time ratings to Australia's G&C Mutual Bank Ltd.

The rating agency assigned the bank a long-term issuer rating of Baa1, a short-term issuer rating of P-2, a long-term counterparty risk assessment of A3(cr) and a short-term counterparty risk assessment of P-2(cr).

The outlook on the ratings is stable.

G&C Mutual Bank's long-term issuer rating reflects its strong asset quality and capitalization, as well as its conservative funding profile, Moody's said. It added that the rating is constrained by the lender's geographic concentration and ongoing pressure on its profitability.

The stable outlook on the bank's ratings reflects its robust financial profile that creates a cushion to accommodate some softening in the property market, or some moderation in capitalization and liquidity as it grows its loan book.

The rating agency said the outlook on the ratings could be lowered to negative if the bank's tangible common equity ratio falls below 16.25% or if its problem loans ratio climbs to 0.8%.

While Moody's sees limited potential for an upgrade of the bank's ratings, it could do so if the operating environment in Australia improves. Conversely, a downgrade could result from deterioration in the bank's asset quality, a weakening of the bank's liquid asset coverage of unsecured wholesale debt maturities, or a decline in its tangible common equity ratio to below 16%.