S&P rates Kookmin Bank notes A-

Standard & Poor's said it assigned its A- rating to Kookmin Bank's (A-/stable/A-2) proposed senior unsecured notes due 2010 to be priced and drawn down from its $3 billion global MTN program, which the company recently expanded from $1.5 billion.

The bank also added upper Tier 2 subordinated notes for possible future issuance, to which S&P assigned a provisional BBB rating.

Kookmin has a leading market position in the Korean domestic banking market, S&P said. With over 21% of total deposits in the sector, its lower funding costs enable the bank to maintain its loan-to-deposit spreads above 3.5%, surpassing the ratios of its domestic competitors.

However, the bank's earnings have been volatile compared with those of its international peers, although S&P expected a gradual stabilization is over the next few years. Kookmin recorded return on assets of 0.2% in 2004 and 1.34% (annualized) for the first nine months of 2005.

Additionally, the bank is not as diversified as its major peers, as its net interest income accounts for over 70% of operating profit, the agency said.

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