Fitch cuts view to negative on Korean banks

Fitch Ratings said it revised the outlooks to negative from stable on the long-term foreign-currency issuer default ratings of various Korean banks.

The policy banks with changed outlooks include Export-Import Bank of Korea's issuer default rating of A+; Korea Development Bank's issuer default rating of A+; Industrial Bank of Korea's issuer default rating of A+; National Agricultural Cooperative Federation's issuer default rating of A+; and Small Business Corp.'s issuer default rating of A+.

The commercial banks with changed outlooks include Shinhan Bank's issuer default rating of A; Woori Bank's issuer default rating of A-; Woori Financial Group's issuer default rating of BBB+; Hana Bank's issuer default rating of A-; Korea Exchange Bank's issuer default rating of A-; Pusan Bank's issuer default rating of BBB+; Kyongnam Bank's issuer default rating of BBB+; and Kwangju Bank's issuer default rating of BBB+. Fitch also said it affirmed Kookmin Bank's issuer default rating at A+ with a negative outlook.

The securities companies with changed outlooks include Woori Investment & Securities Co. Ltd.'s issuer default rating of BBB+; Korea Investment & Securities Co., Ltd.'s issuer default rating of BBB; and Korea Investment Holdings Co. Ltd.'s issuer default rating of BBB.

The finance companies with changed outlooks include Daewoo Capital Co., Ltd.'s issuer default rating of BB+. Fitch also said it changed the outlook of Hyundai Card Co., Ltd.'s issuer default rating of BBB to stable from positive.

The outlook revision on policy institutions is in line with a recent outlook revision of the Korean sovereign to negative from stable, given that these institutions are based on the potential of support from the sovereign, Fitch said.

The outlook revision on the commercial banks reflects concerns that credit costs could rise considerably over the medium term due to economic slowing and tight system-wide liquidity and the potential for other losses such as on securities holdings, the agency said.

The outlook revision on Fitch-rated securities companies takes into account their higher risk business models, Fitch said, and reflects the potential for significant losses on investments.

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