Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Top 4 Korean banks receive favorable reviews from Fitch
Seen above are the main branch buildings of Korea's top four commercial banks. Courtesy of each company
By Park Jae-hyuk
By Park Jae-hyuk
Fitch Ratings revised its outlooks on the long-term issuer default ratings (IDRs) of Shinhan and KB Kookmin banks to “stable” from “negative,” while upgrading the long-term IDRs of Hana and Woori banks to “A” from “A-,” after all of the holding companies of the lenders announced record-high half-yearly earnings this month.
Long-term IDR assesses a borrower's ability to repay its debts over an extended period of time.
The global rating agency affirmed the long-term IDRs of Shinhan and KB Kookmin at “A,” upgrading their short-term ratings to the top grade of “F1+” from the second-best grade of “F1.”
Its revision of its outlooks on the two commercial banks was attributed to the Korean economy's solid overall recovery from the impact of the COVID-19 pandemic. Fitch said that its projections also reflect a stable outlook on Korea's sovereign rating, which was affirmed July 21 at “AA-.”
The rating agency, however, warned the banks about their overseas expansions, which could exacerbate risks over the longer term, if not managed well.
The short-term IDRs of Hana and Woori were also upgraded to “F1+” from “F1.” The rating agency maintained its stable outlooks on the two banks' long-term IDRs.
“The upward revisions reflect our assessment that the sovereign's propensity to support the banks is higher than we previously thought,” Fitch said in a press release.
In particular, the institution upgraded Woori's viability rating to “a-“ from “bbb+,” saying the upgrade reflects improvements in the bank's financial profile over a sustained period and the agency's expectation that the bank will maintain its improved financial profile.
Woori said in a separate press release Friday that it regards Fitch's recent action as being the result of its continuous efforts to manage risks, improve financial soundness and boost profits.
“The recent upgrade of our credit rating proves that we were recognized for our continuous efforts to reform ourselves,” a Woori Bank official said. “This situation is expected to enable us to enjoy favorable business environments overseas, as well as to reduce costs to raise capital.”