Taiwan Ratings affirms ratings of SinoPac group

Taiwan Ratings Corp (中華信評), the local arm of Standard & Poor's Ratings Services, affirmed SinoPac Holdings' (永豐金控) ratings, citing asset quality, capitalization and risk controls of the nation's ninth-biggest financial group by assets.

The credit rating of a corporation is a financial indicator to potential investors of debt securities such as bonds.

Taiwan Ratings affirmed on Monday its "twA" long-term and "twA-2" short-term credit ratings on SinoPac Holdings with a stable outlook.

Subsequently, the ratings agency also affirmed its "twA+" long-term and "twA-1" short-term credit ratings on the group's banking arm, Bank SinoPac (建華銀行), also with a stable outlook.

Taiwan Ratings also affirmed its "twA" long-term and "twA-2" short-term credit ratings on brokerage unit SinoPac Securities Corp (建華證券). The outlook on the long-term rating is stable.

"The ratings reflect the SinoPac group's satisfactory asset quality and capitalization, as well as its prudent risk controls," Taiwan Ratings said in a statement.

Asset quality

The group's asset quality is expected to emerge unscathed following a recent industry-wide rise in delinquent unsecured consumer loans because of its limited exposure and prompt write-offs, the statement read.

Its risk controls are prudent with a focus on quality of business and risk-adjusted returns, it said.

However, counterbalancing factors include the group's small size by international standards, Taiwan Ratings added.

SinoPac Holdings had NT$1.08 trillion (US$32.85 billion) in assets as of the first quarter of this year, according to the latest available data from the Financial Supervisory Commission.

The stable outlook reflects the expectation that the individual risk profiles of SinoPac group members will not change significantly over the medium term, Taiwan Ratings said.

Manageable risks

Integration risks associated with the merger of Bank SinoPac and International Bank of Taipei (台北國際商銀) are expected to be manageable, the ratings services provider said.

The ratings on SinoPac could be revised upward if the merger can bring significant synergies and/or the group's profitability strengthens in the future, the ratings firm added.

Meanwhile, Taiwan Ratings affirmed yesterday its "twA+" long-term and "twA-1" short-term counterparty credit ratings of E.Sun Bank (玉山銀行) after the bank announced last week that it would take over E.Sun Bills Finance Corp (玉山票券) through a share swap.

The ratings on E.Sun Bank continue to reflect the bank's good asset quality, prudent risk controls and adequate capitalization. Counterbalancing factors include potential risks as a result of the bank's ambitious growth strategy, Taiwan Ratings said.