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Fitch rates Pusan Bank note BBB
Fitch Ratings said it assigned an expected BBB rating to Pusan Bank's planned issuance of $200 million lower tier II subordinated notes due 2012. The bank has a BBB+ long-term issuer debt rating, F2 short-term foreign-currency rating, B/C individual rating and 2 support rating.
The outlook is stable.
The agency said Pusan Bank's ratings reflect its good asset quality and profitability, its adequate capitalization and a strong franchise in its home market of Busan, the second-largest city in South Korea. As a result of local loyalties, Pusan Bank has a 32% share of deposits and a 22% share of loans in the city. In 2006, Pusan Bank's non-performing loans ratio improved marginally to 0.8% from 0.9% and precautionary loans declined to 1.9% from 2.0%, Fitch said, and loan loss reserves coverage of non-performing loans was more than satisfactory at 176%.
Nevertheless, while loans and overall asset quality improved and remained high due to the bank's strong loans growth, Pusan Bank's capitalization did decline notably over 2006 to a level that was only just satisfactory: at the end of 2006, its tier I and total capital adequacy ratios stood at 8.1% and 11.1%, respectively, versus 9.1% 12.3% a year before, Fitch said.
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