Fitch affirms Standard Chartered

Fitch Ratings said it affirmed South-Korea based Standard Chartered First Bank Korea Ltd.'s A long-term issuer default rating, F1 short-term rating, C individual rating and 1 support rating.

The outlook is stable.

The agency said the bank's long-term ratings are underpinned by the strength of its 100% parent, Standard Chartered Bank, and its individual rating reflects the bank's limitations in terms of profitability and capitalization in South Korea.

Following its acquisition by Newbridge Capital in 1999, Standard Chartered First's strategy was to achieve high-quality loan book growth by focusing on mortgages and, to a lesser extent, loans to large blue-chip corporates and its treasury operations. Fitch said this resulted in low credit costs, but with intensifying competition, it also led to low margins and low profitability.

Going forward, the agency expects Standard Chartered First's profitability to improve as Standard Chartered (which acquired the bank from Newbridge in April 2005) redirects the bank towards higher-yielding small- and medium-sized enterprises, credit cards and other unsecured personal loans.

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