Standard and Poor's upgrades Sakura Bank
Standard and Poor's on Wednesday, November 22, raised its ratings for Sakura Bank Ltd., saying the bank had stabilized its asset quality problems and improved profitability.
The rating agency raised the bank's long-term counterparty credit rating to BBB+ from BBB and affirmed its A-2 short-term rating on the bank.
The agency said the future outlook on the long-term rating was revised to stable from positive.
"Sakura's credit costs, while still significant, have recently declined and are expected to decrease further," Standard and Poor's said.
"Sakura's profitability, while still weak by global standards, is slightly higher than that of its domestic peers and continues to improve."
"The planned merger with Sumitomo Bank Ltd. is expected to strengthen Sakura's market position, boost operating efficiency, and expand the bank's financial capacity," the rating agency said.
The bank is merging with Sumitomo Bank Ltd. in April.
The bank announced Tuesday that its group net profit stood at 31.3 billion yen ($290 million) in the first half of its fiscal year, down from 40.8 billion yen in the same period last year.
The bank said its profit dropped 23.3 percent for the six months to September after writing off $1.1 billion in bad loans.
The rating agency said Sakura must make further efforts to improve efficiency, strengthen its core competencies and resolve its remaining asset quality problems soon.
"Sakura's restructuring efforts, combined with its strong franchise, should enable the bank to maintain its credit quality despite the continuing difficult business environment," the rating agency said.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)