Moody’s revises ratings on several Taiwan banks

Moody's Investors Service said it upgraded the baseline credit assessments and adjusted baseline credit assessments of First Commercial Bank, Hua Nan Commercial Bank Ltd. and Chang Hwa Commercial Bank to Baa2 from Baa3.

The agency also said it downgraded the baseline credit assessments of DBS Bank (Taiwan) Ltd. to Ba1 from Baa3 and affirmed its adjusted baseline credit assessment at A3.

Moody's has also changed the outlook of First Commercial Bank, First Financial Holding Company, Ltd. and Hua Nan Commercial Bank to stable from positive.

The ratings changes were prompted by outlooks, which provide an opinion on likely rating direction over the medium term, are assigned only to long-term deposit, long-term issuer and senior unsecured debt ratings.

The outlook changes were prompted by an expectation for slower future economic growth in Taiwan, Moody’s said.

The upgrades considered that these banks' improved solvency profiles in recent years, the agency said, despite the economic slump in the second half of 2015 and the first half of 2016.

The downgrade of DBS Bank (Taiwan)’s baseline assessment reflects the bank's persistent low profitability, weak internal capital generation capability and potential execution risks stemming from the integration of the bank's planned acquisition of ANZ Bank (Taiwan) Ltd.’s retail operations, Moody’s said.

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