Moody's ups Korea Development Bank

Moody's Investors Service said it raised to D- from E+ the bank financial strength rating of Korea Development Bank.

The outlook is stable.

The rating upgrade is underpinned by recent improvements in the bank's asset quality and profitability, which Moody's attributed to the completion of corporate restructurings and accompanying asset sales. Moody's also said that improvements in the bank's risk management, combined with the fact that the scale of such restructurings is likely to decrease, mean that the potential negative impact of such restructurings on the bank's financial strength has been reduced.

The bank continues to carry large corporate debt and equity exposures as a result of its policy role, and the D- bank financial strength rating reflects Moody's expectation that the bank would see a decline in asset quality during future economic downturns and a subsequent recovery in profits following any restructurings.

However, the rating agency noted that capital levels are high, having been boosted by an increase in retained earnings and capital injections from the government.

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