3 Mar 2015

TSB Bank's BBB+ rating affirmed

2:42 pm on 3 March 2015

The international ratings agency Standard & Poor's has affirmed TSB Bank's credit rating at BBB+ even after it wrote off its near $54 million investment in Solid Energy's bonds.

The write-off meant TSB had reported a $18.3 million net loss for the December quarter, compared with a near $14 million profit in the same quarter a year earlier.

TSB had already written off nearly $14 million of its investment in Solid Energy's bonds.

S&P said the latest write-down amounted to about 10 percent of TSB's capital.

However, the ratings agency said the Taranaki-based bank would still generate sufficient earnings in the next 12 to 24 months to maintain its capital at a level consistent with its credit rating.

It said the bank's net interest margin had improved in the nine months ended December and it was expecting an improved margin performance over the next two years.

S&P said TSB held a high level of funding relative to its needs.

It also said the need for the write-off doesn't reflect any greater appetite for risk on TSB's part, and that it traditionally invested in highly rated securities such as those of the government-owned Solid Energy.