Moody’s changes Hana Bank’s outlook to positive

On 30 July 2021, Moody's Investors Service has affirmed the long-term foreign currency A1 bank deposit and A1 senior unsecured ratings of Hana Bank.

Moody's has also affirmed the bank's Baseline Credit Assessment (BCA) and adjusted BCA of baa1.

The change in outlook to positive from stable reflects Moody's view that the bank's improved asset performance and funding, along with stable profitability and capitalization, could lead to a stronger credit profile if they're sustained over the next 12-18 months. The positive outlook on Hana Bank reflects the bank's improving asset quality, funding and profitability, narrowing the gap with its domestic bank peers rated with an a3 BCA. The improvements have been sustained since the formation of the bank in 2015 through the merger of Korea Exchange Bank and Hana Bank, which has strengthened its retail banking franchise, resulting in a loan portfolio similar to its peers.

The affirmation of Hana Bank's A1 long-term deposit and senior unsecured ratings and baa1 BCA reflects the bank's strong and improved asset quality; moderate funding and liquidity; strong capitalization; and moderate profitability, which Moody's expects will remain stable.

Hana Bank's A1 long-term deposit and senior unsecured ratings incorporate a three-notch uplift for government support to reflect the very high level of support from the Korean government (Aa2 stable) in times of need. Moody's view of the government support takes into consideration the bank's systemic importance as one of the largest banks in terms of asset size and the bank's designation as a domestic systemically important bank in Korea. It also reflects Korea's strong capacity to provide support, and the government's track record of bailing out distressed banks.

Moody's regards Hana Bank's improved risk management as a governance strength under its environmental, social and governance (ESG) framework, given its implications for the bank's financial strategy and risk management. Today's action reflects the impact on Hana Bank from the governance strength, and the improvement in credit quality it has triggered.

The ratings on the bank's branches are aligned with that of the bank, taking into consideration that the bank and the branches are legally the same entities.

Hana Bank, headquartered in Seoul, South Korea, had total assets of KRw410.7 trillion (USD362.9 billion) at the end of March 2021. Hana Bank is the foreign strategic shareholder of BIDV, owning 15 percent of the Vietnamese bank’s charter capital.