S&P trims Aozora Bank

S&P said it lowered to BBB+ from A- its long-term issuer credit and senior unsecured issue credit ratings on Aozora Bank Ltd.

“We base the downgrade on the removal of one notch of uplift we had incorporated in the long-term issuer credit rating to reflect the likelihood of extraordinary government support for the bank. This is because we have lowered our assessment of the bank’s systemic importance to Japan’s financial system. While banking profitability in the domestic market has been under pressure in the low-interest rate environment, Aozora Bank has made high profitability an important objective in its management strategy,” said S&P in a press release.

Using this strategy, the bank has been increasing its risk appetite, leading to a high proportion of overseas lending to total credits.

The outlook is negative.

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