Central
Government
Agencies 2016
Contents
Introduction
4
Central Government Agencies 2016
5
How We Rate Central Govermnent Agencies
11 Central Government Agencies: Rating Transitions
82 FMS Wertmanagement Anstalt des
oeffentlichen Rechts
85 Freddie Mac
88 Housing Financing Fund Ibudalanasjodur
91 Hrvatska banka za obnovu
Summary Analyses
14 Agence Francaise de Developpement
17 Banco Nacional de Comercio Exterior
20 Banco Nacional de Desenvolvimento Economico
e Social
23 Business Development Bank of Canada
26 Caisse des Depots et Consignations
29 Canada Mortgage and Housing Corp.
32 Cassa Depositi e Prestiti SpA
35 China Development Bank
38 Czech Export Bank
41 DAMU Entrepreneurship Development Fund
44 Delcredere/Ducroire
46 Development Bank of Japan
49 Development Bank of Kazakstan
52 Development Bank of Southern Africa
55 Development Bank of the Philippines
58 Ex-Im Bank of China
61 Ex-Im Bank of India
64 Ex-Im Bank of Korea
67 Ex-Im Bank of the Slovak Republic
70 Export Credit Bank of Turkey
73 Export Development Canada
76 Export Finance & Insurance Corp
79 Fannie Mae
Central Government Agencies 2016 | September 2016
94 India Infrastructure Finance Co.
97 Industrial Bank of Korea
100 Instituto de Crédito Oficial
103 Japan Bank for International Cooperation
106 JSC Development Bank of the Republic of
Belarus
109 JSC National Management Holding Baiterek
112 KfW Kreditanstalt fuer Wiederaufbau
115 Korea Development Bank
118 Landwirtschaftliche Rentenbank
121 Magyar Export-Import Bank
124 Nacional Financiera SNC (NAFIN)
127 National Asset Management Agency
130 Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden N.V.
133 Oesterreichische Entwicklungsbank AG
136 Oesterreichische Kontrollbank AG
139 SID Bank
142 Small business corp
145 Swedish Export Credit Corp.
148Vnesheconombank
Comparative Data
151 Five Year Comparative Data Tables
154 Sovereign Ratings List
spglobal.com/ratings
3
Introduction
Central Government
Agencies 2016
S&P Global Ratings has assigned issuer or
issue credit ratings to 47 central government
agencies, the collective term for a wide range of
financial institutions generally characterized as
having robust policy roles and close links to their
respective governments. About 80% of these
agencies are development banks or export-import
(exim) banks. In broad terms, national development
banks are state-owned institutions primarily
concerned with the provision of long-term capital
to industries and projects that foster economic
development, social objectives, and regional
integration. Exim banks, on the other hand, are
wholly or partly government owned and their main
function is to promote foreign trade, commonly
insuring exporters against losses from nonpayment. Exim banks may also expedite pre- and
post-shipment transactions as well as assist in
finding new export destinations.
Such categorization varies across regions,
however. Some sovereigns find it productive
to have several public policy institutions with
narrow missions. In Korea and Canada, for
instance, separate banks target small and midsize
enterprises (SMEs), national development, and
the export sector. For example, the Canadian
government certifies financing to the SME industry
through the Business Development Bank of
Canada, while the Export Development Canada
supports foreign trade. Other nations have a single
bank for both national development and export
finance activities, such as Croatia’s Hrvatska
Banka za Obnovu i Razvitak.
We consider all the central government agencies
we rate to be government-related entities. Our
agency ratings encapsulate our view of each
entity's relative financial strength, the likelihood
of extraordinary government support, as well
as the related sovereign's creditworthiness. In
general, we regard the majority of national funding
agencies as an extension of the government. We
equalize our ratings on almost 90% of the agencies
featured in this publication with the respective
sovereign ratings because we see the likelihood of
extraordinary support for these entities as almost
certain.
In this booklet, we present key financial data and
summary analyses on the 47 agencies, including
the rationale and outlooks for the ratings.
Moritz Kraemer
Managing Director
Global Sovereigns and International Public Finance
4
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Introduction
How We Rate Central
Government Agencies
S&P Global Ratings generally rates central
government agencies (subsequently referred
to as "agencies") using its methodology and
assumptions for government-related entities
(GREs). In addition to our GRE criteria, we may
apply several other criteria articles to assign a
rating to an agency. For instance, we may use
our guarantee criteria to rate an agency's debt if
the instrument meets conditions in that criteria
article, such as a timely irrevocable guarantee
from the government. By the term "agency," we
mean export credit agencies, development banks,
and other institutions mandated by a country's
central government to provide financing for
specific purposes, typically to achieve certain
policy goals or support economic development.
Many agencies regularly issue bonds in the
capital markets, which makes it important
for investors to have universally recognized,
consistent benchmarks to aid their decisionmaking. In this context, credit rating agencies
can play an essential role through independent,
globally comparable, and consistent ratings.
Components Of Our Rating Analysis
Agencies are typically institutions that a central
government has set up to fulfil a specific
function, such as to support export activity,
the development of specific sectors, economic
diversification, or housing policy. These functions
often cannot be fulfilled by the private sector, due
to the high risks involved or the activities' nonprofit-maximizing nature, making government
support a fundamental aspect of many agencies'
existence. More specifically, we believe most
agencies, if undergoing stress, would receive
extraordinary government support that could
increase their capacity to meet financial
commitments as they fall due. Evaluating the
degree of such support is therefore central to our
rating analysis.
Central Government Agencies 2016 | September 2016
Primary Credit
Analysts:
The line between what we regard as
extraordinary support or ongoing support is not
always distinct. However, extraordinary support
usually occurs when an agency is experiencing
a period of financial stress, and may take the
form of direct credit support, liquidity injections,
loans from the government or through
government-owned banks, recapitalizations,
or a solvency rescue package directly from the
government or other market participants.
Our general analytical approach is to consider
an agency's credit quality as falling between
the inclusive bounds formed by its stand-alone
credit profile (SACP) and the sovereign credit
rating. Therefore, our rating on an agency results
from an analysis of the following elements (see
chart 1):
The agency's SACP, which indicates its credit
quality in the absence of extraordinary support;
The local currency sovereign credit rating, which
reflects the government's ability to support the
agency; and
Our opinion of the likelihood of the agency
receiving sufficient and timely extraordinary
government support to meet its financial
obligations, which we derive from our
assessment of the importance of the agency's
role and the closeness of its link with the
government.
Maxim Rybnikov
London
(44) 20-7176 7125
maxim.rybnikov@
spglobal.com
Eileen X Zhang, CFA
London
(44) 20-7176-7105
eileen.zhang@
spglobal.com
Secondary
Contact:
Valerie Montmaur
Paris
(33) 1-4420-7375
valerie.montmaur@
spglobal.com
Media Contact:
Mark Tierney
London
(44) 20-7176-3504
mark.tierney@
spglobal.com
Additional
Contacts:
SovereignAmericas
sovereignamericas@
spglobal.com
SovereignEurope
SovereignEurope@
spglobal.com
We determine the quality of an agency's
SACP using our methodology in "Stand-Alone
Credit Profiles: One Component Of A Rating,"
published Oct. 1, 2010, on RatingsDirect and
the criteria relevant for the type of agency (for
example, "Banks: Rating Methodology And
Assumptions," published Nov. 9, 2011). Our SACP
assessment provides our "opinion of an issuer's
spglobal.com/ratings
5
Introduction
Chart 1 - Assessment Process For Government-Related Entities (GREs)
Stand-Alone Credit Profile
(SACP)
Government/Sovereign
Rating Constraints
(as applicable)
Link
Likelihood Of
Extraordinary
Government
Support
(Native
Intervention)
Role
Potential GRE
Issuer Credit
Rating
n Currency Considerations
Final GRE
Issuer Credit
Rating
n Potential Rating Above
The Related Government:
–Stress Test, Rating Caps
–Ratings Above
The Sovereign Criteria
Government Local Currency
Issuer Credit Rating
© Standard & Poor's 2016
Chart 2 - Bank Ratings Framework
Bank Rating Methodology
BICRA
Methodology
BANK-SPECIFIC
FACTORS
MICRO
FACTORS
EXTERNAL
SUPPORT
Business Position
Economic Risk Score
Industry Risk Score
Anchor
Stand
Alone
Credit
Profile
Capital and Earnings
Risk Position
SACP
Stand
Alone
Credit
Profile
Setting
the
Group Support
ICR
Government Support
Issuer
Credit
Rating
Funding and Liquidity
BICRA
Banking
Industry
Country
Risk
Assessment
Score
Hybrid debt
and
preferred
stock
ratings
Senior
unsecured
ratings
© Standard & Poor's 2016
6
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Introduction
Most of the central government agencies we
rate are banks or bank-like institutions, and we
therefore commonly use our bank criteria to
assess their SACPs, analyzing six factors (see
chart 2). The first two factors, economic risk
and industry risk, draw on our Banking Industry
Country Risk Assessment methodology. They
represent the strengths and weaknesses of the
broader operating environment, and together
provide an anchor for the SACP. The other four
are bank-specific factors: business position,
capital and earnings, risk position, and funding
and liquidity. Based on our analysis of these four
factors, the SACP is derived by notching up or
down relative to the anchor.
Likelihood Of Government Support: An Agency's
Role For And Link With The Sovereign
S&P Global Ratings analyzes the importance of
an agency's role by assessing the severity of the
effect that a default of the agency would have on
the government or the local economy. An agency
may be important to the government because
it implements a key national policy, provides an
important public service, or facilitates the proper
functioning of a vital economic sector. This
qualitative assessment may be supplemented
with quantitative indicators that vary depending
on the nature of the agency's activity. Such
indicators include, for instance, the size of
agency-financed exports relative to GDP, the
potential effect on employment if development
loans were no longer extended, and the impact
on parts of the housing market if mortgage
support were to reduce.
Central Government Agencies 2016 | September 2016
Chart 3 - Role-Link Matrix For Assessing
The Likelihood Of Government Support
Likelihood of
Extraordinary
Government
Support
Link between the GRE and the Government
creditworthiness in the absence of extraordinary
support or burden." It therefore identifies the
lower boundary of an agency's creditworthiness
if the potential for extraordinary government
support were to dissipate, even though it takes
into account ongoing support an agency may
receive from the central government. The local
currency sovereign credit rating serves as the
upper boundary of an agency's creditworthiness.
Importance of the GRE's Role to the Government
CRITICAL
VERY
IMPORTANT
IMPORTANT
LIMITED
IMPORTANCE
INTERGRAL
Almost
certain
Extremely
high
High
Moderately
high
VERY
STRONG
Extremely
high
Very high
High
Moderately
high
STRONG
High
High
Moderately
high
Moderate
LIMITED
Moderately
high
Moderately
high
Moderate
Low
© Standard & Poor's 2016
Therefore, while assessing the importance of
an agency's role, we also focus on the potential
consequences from the absence of government
intervention. In our view, the more serious the
implications of an agency's default the greater
the government's incentive to provide support to
the agency. Support from the government ranges
from merely targeting the continuation of the
agency's activities or safeguarding employment,
which does not result in rating uplift, to ensuring
full and timely payment to bondholders. We
categorize an agency's role for the government as:
critical, very important, important, or of limited
importance.
We assess the strength and resilience of the
link between an agency and the government
primarily by analyzing the degree to which the
government determines the agency's strategy
spglobal.com/ratings
7
Introduction
and operations and provides supervision.
Analytical considerations include the percentage
of ownership of the agency, the existence of
a partial or full government guarantee of the
agency's obligations, statements of support
(particularly if made publicly), or reputation risk
to the government if the agency were to default.
In particular, we gauge the government's
willingness to support a particular agency,
as demonstrated by the government's policy,
track record of intervention, involvement in the
day-to-day operations of other GREs, as well
as cultural and political aspects related to the
government's intervention and its administrative
capacity to provide timely support. Finally, we
assess potential constraints to government
support that might arise from a legal or regulatory
framework. We would view an agency's link with
the government as either integral, very strong,
strong, or limited.
Having determined the strength of an agency's
role for and the link with the government, we
combine the two using a matrix to arrive at our
assessment of the potential for extraordinary
government support (see chart 3).
For example, if we consider that an agency plays
a very important role and has a strong link with
the state, we will generally regard the likelihood
of extraordinary government support as high.
In fact, we see an almost certain likelihood that
many central government agencies will receive
extraordinary support if needed, and therefore
equalize our ratings on those agencies with the
sovereign ratings. In such a scenario, we do not
determine an SACP if there is no visible transition
risk to such strong support.
To arrive at an agency rating, the last step is to
combine the SACP level with our assessment
of potential extraordinary government support,
Table 1 - Determining A GRE Issuer Credit Rating: Government With A Local Currency Rating Of 'A+'
--Likelihood of extraordinary government support-SACP
AC
EH
VH
H
MH
M
L
a+
A+
A+
A+
A+
A+
A+
A+
a
A+
A+
A+
A
A
A
A
a-
A+
A
A
A
A-
A-
A-
bbb+
A+
A
A
A
A-
BBB+
BBB+
bbb
A+
A
A
A-
BBB+
BBB+
BBB
bbb-
A+
A
A-
BBB+
BBB
BBB
BBB-
bb+
A+
A
A-
BBB+
BBB
BBB-
BB+
bb
A+
A
BBB+
BBB
BBB-
BB+
BB
bb-
A+
A
BBB
BBB-
BB+
BB
BB-
b+
A+
BBB+
BBB-
BB+
BB
BB-
B+
b
A+
BBB+
BB+
BB
BB-
B+
B
b-
A+
BBB
BB
BB-
B+
B
B-
ccc+
A+
BBB-
BB-
B+
B
B-
*
ccc
A+
BB+
B+
B
B-
*
*
ccc-
A+
BB+
B+
B-
*
*
*
cc
A+
BB-
B+
*
*
*
*
*These combinations may suggest an issuer credit rating in the 'CCC' or weaker rating categories. As per paragraph 43, we only assign issuer credit ratings for GREs in
these rating categories based on "Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings," published Oct. 1, 2012. SACP--Stand-alone credit profile.
AC--Almost certain. EH--Extremely high. VH--Very high. H--High. MH--Moderately high. M--Moderate. L--Low.
8
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Introduction
depending on the sovereign's creditworthiness
(see table 1 as an example when the local
currency sovereign rating is 'A+'). There are
separate tables for each sovereign rating level
as part of "Rating Government-Related Entities:
Methodology And Assumptions," published March
25, 2015 (see also the first question in the FAQ
below).
Frequently Asked Questions
Can an agency rating deviate from the outcome
suggested by the standard tables?
Yes. The long-term rating on an agency might vary
by one notch compared with that in the tables
when a gradual transition of an agency's role for
or link with the sovereign leads to a weaker or
stronger likelihood of extraordinary government
support over time. For example, we would usually
assign a rating of 'A' to an agency with an SACP
of 'bb' that benefits from an extremely high
likelihood of extraordinary support from an 'A+'
rated government. However, we could assign
a rating of 'A-' instead, if we believed that the
agency's role were changing and that this would
eventually reduce the likelihood of extraordinary
government support.
How do you differentiate between extraordinary
support and other forms of support?
Governments often support the activities of
agencies they have established in a number of
ways, such as through cheap loan financing,
equity injections, or guarantees. We would
not necessarily view all of these measures as
extraordinary support.
The difference between extraordinary support
and other forms of support is not always clear.
We tend to view support as extraordinary when
it is temporary, entity specific, and often related
to financial stress at one agency. Very broadly,
we think of extraordinary support from the
perspective of its enhancement of an agency's
ability to service financial commitments as
they fall due, particularly in times of stress.
Central Government Agencies 2016 | September 2016
For instance, if an agency is in distress and the
government provides it with financial support
(such as through an equity injection) to ensure
the agency pays its bond obligations on time
and in full, we would view this as extraordinary
support. However, if the aim of financial support
is primarily to safeguard employment or the
expansion of the agency's activities, then
we would tend to not view such support as
extraordinary.
How do you view government guarantees?
We tend to view explicit government guarantees
on an agency's obligations as positive, other
factors remaining equal. Where the agency's
specific obligations have a timely, irrevocable,
and unconditional government guarantee, among
other key features, we apply our criteria in "Rating
Sovereign-Guaranteed Debt," published April
6, 2009. However, in many cases, the defining
characteristic of such guarantees is that they
do not promise timely payment and therefore do
not generally require the guarantor to meet the
obligations on the respective payment dates, but
only after the issuer's resources are exhausted,
which could take time. In those cases, the
statutory guarantee would count as one factor
among others that might create an incentive
for the government to provide timely support to
the agency. Specifically, we would take this into
account when we analyze the link between the
agency and the government.
How do you rate agencies that form part of a
group?
When an agency forms part of a group, we
would typically rate them using our "Group
Rating Methodology," published Nov. 19, 2013.
In addition to assessing the agency's SACP and
group status, we would also consider whether
the agency--as a group subsidiary--is likely to
benefit directly or indirectly from extraordinary
government support, or receive no government
support (see table 2, taken from "Group Rating
Methodology").
spglobal.com/ratings
9
Introduction
Table 2 - Rating Government-Related Entities--Likelihood Of Government Support Versus Group Support*
SACP or GCP levels
If the subsidiary is likely
to benefit directly from
extraordinary government
support
If the subsidiary is likely to get
extraordinary government support
indirectly through the group
If the government is
unlikely to support
the subsidiary
either directly or
indirectly
SACP is lower than an
unsupported GCP
ICR = Higher of the SACP +
uplift for potential government
support, or SACP + uplift for
group status uplift (subject to a
cap at the level of the GCP unless
the subsidiary is insulated).
ICR = SACP + uplift for group
status uplift. If the group status is
"strategically important" or lower,
the ICR is capped at one notch below
the GCP.
ICR = SACP + uplift
for group status
(with reference to
the unsupported
GCP).
SACP is higher than or
equal to an unsupported
GCP
ICR = SACP + uplift for potential
government support (subject to a
cap at the level of the GCP unless
the subsidiary is insulated).
ICR = SACP + uplift for group
status (with reference to the GCP).
If the group status is "strategically
important" or lower, the ICR is capped
at one notch below the GCP (unless
the subsidiary's SACP>= the GCP).
If the SACP>= the GCP, the ICR is
capped at the level of the GCP (unless
the subsidiary is insulated).
ICR = SACP, subject
to a cap at the level
of the GCP (unless
the subsidiary is
insulated).
*See section VI. E.1 of "Group Rating Methodology" for the definition of an insulated subsidiary. Subject to paragraph 77, the rating assigned to a subsidiary that does
not have an SACP is at the level of the GCP if the subsidiary is "core," or one notch lower than the GCP if the subsidiary is classified as "highly strategic.
" SACP--Stand-alone credit profile. ICR--Issuer credit rating (also FSR--Financial strength rating for insurance companies). GRE--Government-related entity.
Related Criteria And Research
––Rating Government-Related Methodology And
Assumptions, March 25, 2015
––General Criteria: Group Rating Methodology, Nov.
19, 2013
––Methodology: Timeliness Of Payments: Grace
Periods, Guarantees, And Use Of 'D' And 'SD'
Ratings , Oct. 24, 2013
––Banking Industry Country Risk Assessment
Methodology And Assumtions, Nov. 9, 2011
––Stand-Alone Credit Profiles: One Component Of A
Rating, Oct. 1, 2010
––Rating Sovereign-Guaranteed Debt, April 6, 2009
Only a rating committee may determine a rating action and this
report does not constitute a rating action.
––Banks: Rating Methodology And Assumptions,
Nov. 9, 2011
10
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Introduction
Central Government Agencies:
Rating Transitions
Our ratings on central government agencies tend
to mirror the sovereign credit ratings; therefore,
the overall agency rating trend correlates closely
to that for sovereigns (see chart 1). In general,
rating actions on the sovereign often result in
similar rating actions on agencies.
Chart 1 - Central Government Agencies And Sovereigns
Rating Trend Comparison
Sovereigns
Agencies
A+
Recent agency rating changes prompted by
sovereign rating actions include the:
––Upgrade of Small Business Corp., Ex-Im Bank of
Korea, and Industrial Bank of Korea as a result
of the upgrade of the Republic of Korea to 'AA'
from 'AA-' on Aug. 8, 2016;
––Lowering of our foreign and local currency
ratings on Türk Eximbank to 'BB/B' and 'BB+/B',
respectively, from 'BB+/B' and 'BBB-/A-3' on
July 20, 2016, in response to the downgrade of
Turkey;
––Lowering of our foreign and local currency
ratings on JSC National Management Holding
Baiterek to 'BB+/B' following Kazakhstan's
downgrade to 'BBB-/A-3' from 'BBB/A-2' on
Feb. 17, 2016; and
––Raising of our long-term rating on Spanish
Instituto de Credito Oficial to 'BBB+' from 'BBB'
on Oct. 6, 2015, after the upgrade of Spain.
The Likelihood Of Support (LOS) Drives
Most Agency Ratings
We have equalized our ratings on 41 of the 47
central government agencies featured in this
publication with the related sovereign credit
ratings. Apart from Export Finance & Insurance
Corp. which falls under our sovereign guarantee
criteria, 46 are rated as government related
entities, This indicates that we see an almost
certain likelihood of 40 entities receiving
extraordinary government support if needed,
Central Government Agencies 2016 | September 2016
A
A-
2008
2010
2012
2014
2016
© Standard & Poor’s 2016.
which in turn stems from our view of their critical
role for and integral link with the sovereign (see
charts 2 and 3).
We assess both the link and role in a prospective
manner, taking into account observable facts as
well as our forecasts. Almost all of the central
government agencies carry out what we believe
to be essential public policy roles, and for only a
small minority do we consider the role to be very
important or important. Similarly, 96% of the
agencies have an integral link with their respective
governments, in our view, implying that most of
them operate as an arm of the state or are tightly
controlled by the government.
As a general principle, we believe that the higher
the likelihood of an agency receiving sufficient
and timely extraordinary government support, the
closer the agency's creditworthiness to that of the
spglobal.com/ratings
11
Introduction
sovereign. The lower the likelihood of support, the
closer the rating is likely to be to its stand-alone
credit profile (SACP).
In our opinion, extraordinary government support
could enhance an agency's capacity to meet its
financial commitments and we have seen several
examples of such support on both sides of the
globe:
––The French government has provided
extraordinary support to Agence Francaise de
Developpement (AFD) in the past through its
direct takeover of debt cancellations of African
countries under the International Monetary
Fund and World Bank's Heavily Indebted Poor
Countries initiatives. AFD benefits from a reserve
account provided by the French government.
Since June 2015, a legal contract clarifies that
this account automatically and immediately
covers sovereign defaults.
––Export-Import Bank of India (India Exim) receives
ongoing state aid, mainly through regular
capital infusions, interest equalization, and
loan guarantees, reflecting the government's
commitment to expanding the entity's scale and
scope of operations. The government injected
Indian rupee (INR) 13 billion in India Exim in
fiscal year ended March 31, 2015, increasing
its paid-up capital to INR50.6 billion. The union
budget for fiscal year 2016 has allocated a INR13
billion capital infusion into India Exim.
––The People's Bank of China provided the ExportImport Bank of China (China EXIM) with a $45
billion capital injection at midyear 2015 to
enhance the bank's lending capacity, highlighting
China EXIM's instrumental role in facilitating
China's economic rebalancing. Furthermore, the
China Banking Regulatory Commission (CBRC)
applies a zero-risk weight to banks' holdings of
bonds issued by China EXIM and other policy
financial institutions. This is in contrast to
CBRC's regulatory treatment of bonds issued by
commercial banks. China EXIM receives ongoing
interest support from the Ministry of Finance for
12
Central Government Agencies 2016 | September 2016
Chart 2 - Rated Agencies' Link With
The Government
Very Strong
4%
Integral
96%
© Standard & Poor's 2016.
Chart 3 - Rated Agencies' Role For
The Government
Critical
91%
Important
2%
Very
Important
7%
© Standard & Poor's 2016.
policy loans it extends at rates below the cost of
funding. The ministry may also provide general
support if the bank reports financial losses.
A prospective assessment is particularly crucial
when an agency's role or link is in transition,
or expected to undergo a rapid transformation
following a certain event, including but not limited
to a change in the regime or public sector policy,
a catastrophe in an area where the agency is
relevant, or credit issues at the agency. Although,
in our view, the likelihood of support does not
tend to vary significantly over time, for some
spglobal.com/ratings
Introduction
agencies, the scope of government support has
evolved considerably. Eksportfinans ASA, for
example, is a partly state-owned Norwegian
export credit agency. In 2011-2012, we lowered
our ratings on the company after the sovereign
relieved Eksportfinans from the responsibility
of administering government-subsidized
export credit. At that time, we considered
that the government's decision implied a
considerably reduced likelihood of Eksportfinans
receiving extraordinary support, based on our
reassessment of the company's residual role
to limited importance from very important,
and that of its link to limited from very strong,
between November 2011 and February 2012. The
shift in the agency's role therefore negatively
affected its creditworthiness, as was underlined
by consecutive downgrades. At present,
we no longer use our GRE criteria to assess
Eksportfinans.
Even though we do not rate the U.S. ExportImport Bank (U.S. Exim Bank), it provides a
useful example, since we've noted weakening
of the likelihood of support. U.S. Exim Bank
is the official export-credit agency of the U.S.
federal government. However, as a result of a
disagreement in congress over U.S. Exim Bank's
role in the economy, government support for
the agency reduced substantially and it ceased
operations for about five months in 2015. This
negative intervention revealed the agency's
weakening importance for the government and
Central Government Agencies 2016 | September 2016
implies its potential dismantling in the future.
In our view, this situation puts U.S. Exim Bank in
a weaker position to meet its credit obligations,
owing to the government's apparently reduced
commitment to support the agency in times of
financial distress.
Changes In SACPs Can Also Contribute
To Rating Trends
For the few central government agencies whose
creditworthiness we do not regard as being
synonymous with the sovereign's, factors other than
a sovereign rating action could lead us to raise or
lower the rating. For example, we raised our longterm issuer credit ratings on Iceland’s Housing
Financing Fund on July 21, 2016, by one notch to
'BB' because of stronger projected capitalization
that improved its SACP to 'b' from 'b-'.
In summary, sovereign rating actions are the main
triggers of rating changes for central government
agencies, since we equalize most of our agency
ratings with those on the sovereign. However,
we could review any agency rating that does
not benefit from an almost certain likelihood of
extraordinary support if there are modifications
to that support, including due to evolving
relationships and policy roles, or if there's a
change in SACPs.
All ratings quoted refer to Foreign Currency Issuer
Credit Ratings as of 31st of August 2016 unless
noted otherwise.
spglobal.com/ratings
13
Summary Analysis
Agence Francaise de
Developpement (AFD)
Rationale
We equalize our ratings on AFD with those
on France because we see an almost certain
likelihood that the French government would
provide timely and sufficient extraordinary
support to AFD in the event of financial distress.
This reflects our view of AFD's critical role as
the legally mandated public agency for the
government's bilateral aid and concessionary
lending to developing countries and French
overseas territories; and integral link with the
state as a fully owned, directly controlled public
financial institution.
AFD's status as an Etablissement Public à
Caractère Industriel et Commercial (EPIC),
prevents it from being subject to bankruptcy
proceedings, since the French government has
ultimate legal responsibility for its solvency.
The EPIC status supports AFD’s business model
because state budgetary resources limit the
impact of development policy on AFD's budget.
Moreover, it enables AFD prompt access to
emergency funding from the French treasury
through the state's public debt fund ("Caisse de la
Dette Publique"). We also consider that the French
government's direct monitoring of, and financial
and operational involvement with, AFD will remain
strong. AFD's public-service-focused activities
cannot be carried out on a commercial basis, in
our view.
The French government has provided
extraordinary support to AFD in the past through
its direct takeover of debt cancellations of African
countries under the International Monetary
Fund and World Bank's Heavily Indebted Poor
Countries initiatives. AFD benefits from a reserve
account provided by the French government.
Since June 2015, a legal contract clarifies that this
account automatically and immediately covers
sovereign defaults. Moreover, ongoing support
14
Central Government Agencies 2016 | September 2016
for AFD, through a change in the dividend policy,
resulted in greater retained earnings in 2015 that
increased the agency's capital.
Amid rising budgetary constraints, AFD's role
has become even more important to the state
in meeting international official development
assistance (ODA) obligations, at limited cost to
the government's budget. In contrast, government
transfers to multilateral development entities,
which still channel 70% of France's ODA, weigh
directly on the government's budget.
AFD delivers aid, provides concessional loans and
technical assistance, and helps define the French
approach to ODA. Along with the fight against
extreme poverty, which is the primary goal of
ODA, we expect AFD's objectives under the 20172019 framework to continue to embody a wider
notion of development. AFD has increasingly
become a soft tool for French economic
diplomacy, with indirect support for exports and
investment abroad. All in all, AFD plans to double
its assets to €60 billion by 2020, by which time its
annual commitments are expected to approach
€12.5 billion from an estimated €8.5 billion
in 2016. Of the additional €4 billion in annual
commitments, about €2 billion will be dedicated
to climate change.
On a stand-alone basis, AFD's loan exposures
are risky, in our view, reflecting concentration
in countries rated 'BB+' or lower. Nonetheless,
we believe the banking regulatory framework
underpins AFD's sound governance and risk
management practices. Counterparty risk
exposure is managed within global limits and
AFD's exposure to currency and interest rate risks
remains limited. Furthermore, this risky exposure
translates into relatively low nonperforming
loans, given that the French government covers
sovereign risk and AFD can resort to diplomatic
Ratings:
AA/Negative/A-1+
Last Ratings Action
And Date
Ratings and outlook
affirmed on Feb. 23,
2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To provide official
aid to developing
countries and
France's overseas
territories
Issuer Website:
www.afd.fr
Primary Credit
Analyst:
Mehdi Fadli
Paris
(33) 1-4420-6706
mehdi.fadli@
spglobal.com
Secondary Credit
Analyst:
Philippe Raposo
Paris
(33) 1-4420-7377
philippe.raposo@
spglobal.com
Ratings At End June
2015:
AA/Negative/A-1+
Ratings At End June
2008:
AAA/Stable/A-1+
spglobal.com/ratings
Summary Analysis
pressure to have loans repaid. We regard risk
monitoring as adequate, although concentration
risk remains high.
We expect that conversion of €2.4 billion of special
state resources into additional Tier 1 capital will
more than double AFD's solvency ratio in 2016.
AFD's expected Tier 1 solvency ratio will look high
compared with that of commercial banks after
the conversion, but we believe it will allow AFD
to achieve its growth strategy while adequately
capturing its higher credit and concentration risks.
Furthermore, the French government would provide
supplementary funding to AFD through special
state resources. Overall, the strengthening of AFD's
capital ratio is likely to anticipate the agency's
objectives for 2020. We expect loan commitments
to increase in subsequent years in light of the 2020
objectives, although there is some uncertainty
about the agency's near-term operational capacity
to achieve this goal. Furthermore, AFD's lending
has nearly reached the set exposure limit in a
few countries. Given the slowdown of growth in
developing countries and rise of public debt in subSaharan Africa, AFD may have difficulty reaching
its annual loan commitment target.
Outlook
The negative outlook on AFD reflects that on
France. We could lower our ratings on AFD
following a similar rating action on France. We
may also lower the ratings if we believed AFD no
longer had an integral link with the government,
for example, if the state's financial support were
to weaken; or if AFD's role were to diminish, for
instance because the state decided to rely on
multilateral banks only for international aid or
concessional loans. We view this last scenario as
very unlikely.
We could revise the outlook to stable if we were to
take a similar action on France.
Agence Francaise de Developpement: Selected Indicators
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
9.4
8.9
11.2
11.7
N/A
Leverage ratio (%)
9.0
9.7
10.9
11.6
14.0
Total adjusted capital/adjusted assets (%)
8.4
9.1
10.4
11.0
13.4
Net nonperforming assets/customer loans + other real estate owned (%)
0.0
0.1
-0.1
0.3
0.4
50.7
43.2
40.1
39.1
39.3
0.5
0.4
0.7
0.5
0.4
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
30.1
26.0
30.4
26.1
19.4
100.8
98.1
104.1
91.0
89.5
12.3
21.2
8.3
19.4
24.3
9.9
8.7
12.3
5.0
2.5
Growth in adjusted assets (%)
14.7
21.5
10.3
21.8
18.3
YoY growth in loan loss provisions (%)
41.8
4.5
195.9
-44.9
-6.8
113.1
111.4
113.1
105.6
N/A
10.7
10.0
10.9
12.5
16.2
100.0
100.0
100.0
100.0
100.0
10.7
10.0
10.9
12.5
16.2
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
Growth in loss reserves (%)
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
15
Summary Analysis
Agence Francaise de Developpement: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Assets (category name - no data)
Cash and money market instruments
1258
1231
1034
355
3665
Securities
2740
1904
1669
2204
1671
Loans to banks (net)
6256
5668
5333
4151
N/A
22498
20028
16519
15252
12770
639
582
535
477
454
Customer loans (net)
21859
19446
15984
14775
12316
Earning assets
32824
28875
24606
21951
18082
Customer loans (gross)
Loan loss reserves
Equity interests/participations (nonfinancial)
63
72
70
70
65
620
299
80
85
90
Total assets
35834
31243
25713
23318
19147
Adjusted assets
35813
31223
25696
23302
19134
3
10
11
15
17
All other assets
Liabilities (category name - no data)
Total deposits
27886
23763
19717
18053
14513
Other liabilities
Other borrowings
4744
4462
3156
2542
1974
Total Liabilities
32633
28235
22884
20609
16505
Total equity
3202
3008
2828
2708
2642
Common shareholders' equity (reported)
2906
2724
2591
2491
2437
Nonperforming assets
634
593
514
524
507
Preprovision operating income
295
216
249
151
126
Equity (category name - no data)
Other items
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
16
Central Government Agencies 2016 | September 2016
98
69
66
22
40
173
120
151
95
65
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
Banco Nacional de Comercio
Exterior S.N.C. (Bancomext)
Rationale
The ratings on Bancomext reflect the bank's
adequate business position, capital and earnings,
and risk position, above-average funding, and
adequate liquidity. The ratings also incorporate
our view that there is an almost certain likelihood
that the Mexican government would provide
extraordinary and timely support to the bank
in the event of financial destress. Due to this
support, the long-term rating on the bank is one
notch higher than our assessment of its standalone credit profile.
Our starting point in assigning an issuer credit
rating to banks operating only in Mexico--such as
Bancomext--is 'bbb'.
Ratings:
BBB+/Stable/A-2
Last Ratings Action
And Date
Ratings affirmed on
May 12, 2016
by 27% in 2015 (CAGR was 14% for the last three
years), and we expect the bank to maintain this
trend over the next 12 to 18 months.
Our capital and earnings assessment remains at
adequate, supported by a projected risk-adjusted
capital (RAC) ratio of between 7.0% and 7.3% over
the next 12 to 24 months. Despite the aggressive
growth rates observed in the loan portfolio,
Bancomext maintains adequate RAC ratios
(8.01% as of Dec. 31, 2015) supported by capital
injections and internal capital generation.
We see Bancomext's quality of capital as positive,
considering that its equity is fully composed of
paid capital and retained earnings. Profitability
remains modest. The return on assets stood at
Bancomext is the government's most important
0.27% as of year-end 2015, and we expect this
financial vehicle for promoting and developing
ratio to stand at about 0.35% in 2016-2017. If
Mexico's foreign trade financing and foreign
the bank's financial performance deviates from
currency generators. It grants loans and credit
our forecasts for 2016, there would be a high
guarantees, directly or through commercial banks, likelihood that Bancomext's RAC ratio for 2016
with the aim of improving Mexican companies'
and the projected RAC ratio for 2017 would drop
productivity and competitiveness. Bancomext's
below 7%. However, our issuer credit ratings
key role as the only development bank in Mexico
on Bancomext would not be affected, given our
oriented toward foreign trade bolsters our view of view of the almost certain likelihood of the bank
its high stability. Bancomext is the tenth largest
receiving extraordinary government support.
bank in the Mexican financial system, including
total loans and credit guarantees, and the
We consider Bancomext's loan portfolio to be well
country's third largest development bank, behind diversified among economic sectors and business
Nacional Financiera S.N.C and Banco Nacional
segments, and we expect the bank will continue
de Obras y Servicios Públicos as of March 2016,
focusing on segments where it has expertise, with
when its loans totaled MXN158 billion and its
no significant changes in its lending composition.
guarantees about MXN29 billion.
Considering guarantees offered by the bank
In 2015, Bancomext's total loans increased by
(MXN26,915 million as of December 2015), its total
33% compared with 2014. The compound annual
credit exposure stood at MXN134, 428 million as
growth (CAGR) of total loans over the last three
of year-end 2015, a 33% increase with respect to
fiscal periods stood at 31.5% and we expect credit 2014.
expansion of about 30% on average for 20162017. Bancomext maintains adequate business
As of December 2015, private sector loans
stability, in our view. Operating revenues grew
represent 73% of the total loan portfolio. The
Central Government Agencies 2016 | September 2016
SACP:
bbb
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To support and
develop foreign trade
in Mexico
Issuer Website:
www.bancomext.
com
Primary Credit
Analyst:
Jesus S Sotomayor
Mexico City
(52) 55-5081-4486
jesus.sotomayor@
spglobal.com
Secondary Credit
Analyst:
Elena Enciso
Mexico City
(52) 55-5081-4406
elena.enciso@
spglobal.com
Ratings At End June
2015:
BBB+/Stable/A-2
Ratings At End June
2008:
N/A
spglobal.com/ratings
17
Summary Analysis
three largest exposures were in the tourism (17%),
energy (12%), and industrials (16%) sectors. The
top 20 credit exposures represented around
30% of total loans and 2.34x of total adjusted
capital. We do not expect creditor concentration
to change significantly over the next two years.
The bank has maintained stable and improving
nonperforming loan (NPL) ratios in line with the
industry average. We expect the bank to maintain
its strategy of diversifying into productive sectors
that could help suppliers (mostly SMEs) develop
competencies in order to be considered by big
exporting corporations.
Although Bancomext's funding structure lacks
a retail deposit component, we believe that
the ongoing support the bank receives from
the government is reflected in higher financial
flexibility. This support (through the Mexican
government's guarantee) allows the bank to
increase its funding sources.
Bancomext's liquidity remains adequate, in
our view, considering our liquidity ratio and the
bank's manageable short-term obligations. We
expect the bank to maintain prudent liquidity-risk
management, and the government to continue
supporting the bank, helping it to access
additional liquidity if needed.
We base our assessment of an almost certain
likelihood of extraordinary government support on
Bancomext's critical role as a vehicle in promoting
and developing foreign trade in Mexico through
local companies and financial institutions; and
its integral link with the government, which fully
owns the bank and provides an explicit guarantee
for all of its obligations.
Outlook
The stable outlook on Bancomext for the next
18-24 months reflects that on the sovereign.
We expect Bancomext will maintain its critical
Banco Nacional de Comercio Exterior : Selected Indicators
Period
Currency
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
MXN
MXN
MXN
MXN
Denomination
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
12.7
13.1
13.7
13.9
6.4
6.6
6.6
5.6
Leverage ratio (%)
Total adjusted capital/adjusted assets (%)
6.4
6.6
6.6
5.6
Net nonperforming assets/customer loans + other real estate owned (%)
-1.1
-0.8
-0.6
-2.5
107.9
87.2
100.6
111.4
0.2
0.5
0.5
0.4
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
21.7
38.0
42.8
43.1
290.2
230.4
146.0
2274.7
Growth in customer loans (%)
32.8
38.3
23.7
16.7
Growth in loss reserves (%)
44.8
15.5
-15.1
-28.4
Loan loss reserves/gross nonperforming assets (%)
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
22.0
20.1
1.5
10.5
511.4
N.M.
N.M.
N.M.
Stable funding ratio (%)
75.6
72.7
71.7
69.5
Short-term wholesale funding/total wholesale funding (%)
79.9
84.6
84.5
86.0
Total wholesale funding / funding base (%)
65.9
68.9
72.7
75.0
Short-term wholesale funding/funding base (%)
52.7
58.3
61.4
64.5
18
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Banco Nacional de Comercio Exterior : Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
MXN
MXN
MXN
MXN
Mil.
Mil.
Mil.
Mil.
40716
38060
33634
43903
121061
106132
99607
96571
0
0
0
0
152054
114528
82789
66934
2423
1673
1448
1706
Customer loans (net)
149631
112855
81341
65228
Earning assets
313831
258720
216030
207408
494
477
479
461
Period
Currency
Denomination
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Equity interests/participations (nonfinancial)
All other assets
716
239
286
705
Total assets
321057
263116
219034
215821
Adjusted assets
321057
263116
219034
215821
Liabilities (category name - no data)
Total deposits
99448
74437
54865
46754
Other borrowings
75360
63227
52140
47248
Other liabilities
8581
6664
3426
16607
Total Liabilities
300588
245640
204632
203676
Equity (category name - no data)
Total equity
20469
17476
14402
12145
Common shareholders' equity (reported)
20469
17476
14402
12145
835
726
992
75
Preprovision operating income
2096
1918
1317
928
Credit loss provisions (net new)
1015
166
0
0
793
1315
1102
937
0
0
0
0
Other items
Nonperforming assets
Net income before extraordinaries
Extraordinary income
role for and integral link with the government by
continuing to support and develop foreign trade
in Mexico. As long as we consider Bancomext a
government-related entity with an almost certain
likelihood of receiving government support, our
ratings on the bank will move in tandem with
those on the sovereign.
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
19
Summary Analysis
Banco Nacional de Desenvolvimento
Economico e Social (BNDES)
Rationale
The ratings on Brazil-based development
bank BNDES reflect our view that the bank is a
government-related entity (GRE) with an almost
certain likelihood of receiving extraordinary
government support. The ratings also reflect
our view of BNDES' strong business position,
given its highly important economic role as the
largest development bank in the country. We
also take into account its moderate capital and
earnings, supported by our average forecast
risk-adjusted capital (RAC) ratio of 5.4% for the
next 24 months. We also continue to assess
the bank's risk position as strong, reflecting its
focus on servicing its core customers and solid
underwriting standards, in addition to its aboveaverage funding and strong liquidity.
We view BNDES as one of the most economically
important GREs in the country; it remains key to
the government's economic strategy, and crucial
for long-term investments and infrastructure
financing, which the country critically needs.
We view the bank as having an integral link
to the sovereign, given it is fully owned and
controlled by the government, which appoints
its board members. This also reflects our view
that the bank counts on ongoing support from
the government, either through advantageous
funding conditions or capital injections. We
also consider that BNDES plays a critical role in
the Brazilian economy, given its unique ability
to provide long-term financing at low cost for
large infrastructure projects. In our view, over
time, further development of Brazilian capital
markets could lessen BNDES' reliance on longterm financing, depending on structural changes
to promote a more liquid and broad local capital
market as well as sounder macroeconomic
fundamentals. The integral link and critical role
lead to our view of an almost certain likelihood of
government support for BNDES, under our GRE
20
Central Government Agencies 2016 | September 2016
criteria. Therefore, we equalize our ratings on the
bank with those on the sovereign.
Ratings:
BB/Negative/-Last Ratings Action
And Date
Ratings and outlook
affirmed on Jul. 12,
2016
SACP:
bbb
BNDES was founded in 1952 as the main longterm financing instrument for investments in
all sectors of the economy. The bank has no
branches and its client base includes large
corporate companies and financial institutions,
which take the risk of lending to the retail
and small and midsize enterprises segments
through BNDES' fund transfers. As a result, the
counterparty credit risk of BNDES' loan portfolio
is lower than for other banks in the country,
which is reflected in the bank's above-average
asset quality.
LOS:
Almost certain
Regarding capital and earnings, we believe
the bank will maintain a relatively stable RAC
ratio because earnings retention will likely be
enough to support risk-weighted exposure
growth and maintain its objective of reaching a
15% regulatory capital ratio. Furthermore, given
BNDES' economic importance, we expect the
federal government to provide extraordinary
support, if necessary.
Issuer Website:
www.bndes.gov.br
We asses BNDES' risk position as strong
reflecting the bank's focus on servicing its
core customers, solid underwriting standards,
and adequate management of mismatches.
In our opinion, BNDES has good asset-quality
indicators among its regional peers and
compared with global peers operate in countries
with extremely high economic risk. We believe
this reflects the bank's loan portfolio strategy,
which focuses on large corporate companies and
financial institutions.
Role:
Critical
Link:
Integral
Key Policy Role:
It is key to
the Brazilian
government's
economic strategy,
and crucial for longterm investments
and infrastructure
financing.
Primary Credit
Analyst:
Edgard Dias
Sao Paulo
(55) 11-3039-9771
edgard.dias@
spglobal.com
Secondary Credit
Analyst:
Guilherme Machado
Sao Paulo
(55) 11-3039-9754
guilherme.
machado@
spglobal.com
Ratings At End June
2015:
BBB-/Stable/-Ratings At End June
2008:
BBB-/Stable/--
The bank's role as the main long-term financing
agent requires it to have a funding base that
adequately matches its exposures, especially in
an economy that's based on short-term lending,
spglobal.com/ratings
Summary Analysis
such as Brazil's. As a result, BNDES' funding base
is broadly stable and long term, with privileged
access to government-treasury credit lines
and the Fundo de Amparo ao Trabalhador (FAT)
transfers, which together account for more than
80% of its capital structure.
BNDES has historically had a very large liquidity
pool. Our stable funding metric doesn't truly
reflect the above-average quality of BNDES'
funding, given the very long-term nature of the
bank's funding lines: The treasury credit lines are
low cost and most of them mature in 35 years,
and the principal on FAT transfers is likely to be
repaid only if FAT can't cover the unemployment
insurance program.
Outlook
The negative outlook reflects our view that the
ratings on BNDES should move in tandem with
those on the sovereign.
We anticipate that within the next year a
downgrade could stem in particular from
potential key policy reversals given the fluid
political dynamics, including lack of cohesion
within the cabinet, inconsistent policy initiatives,
and uncertainties during or following an
impeachment process. A downgrade could also
result from greater economic turmoil than we
currently expect, either due to governability
issues or the weakened external environment.
We could revise the outlook to stable if Brazil's
political uncertainties and conditions for
consistent policy execution were to improve
across branches of government to stanch
fiscal deterioration and strengthen GDP growth
prospects. We expect that these improvements
would support a quicker turnaround and help
Brazil exit from the current recession, facilitating
improved fiscal performance and providing more
room to maneuver in the face of economic shocks.
Banco Nacional de Desenvolvimento Economico e Social : Selected Indicators
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
R$
R$
R$
R$
R$
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
9.8
10.6
12.5
8.4
10.8
Leverage ratio (%)
4.7
4.8
5.4
5.8
7.3
Total adjusted capital/adjusted assets (%)
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
Growth in loss reserves (%)
Growth in adjusted assets (%)
8.6
8.8
9.2
7.8
9.5
-0.7
-0.5
-0.6
-0.7
-0.7
129.9
78.9
78.8
81.5
49.3
0.7
1.0
1.0
1.1
1.4
39.0
48.0
51.9
55.2
60.6
2879.3
3651.0
4782.6
1385.7
625.6
7.0
15.1
14.7
15.5
17.3
47.5
-0.8
-9.1
-3.5
-13.4
6.1
12.2
9.3
14.5
13.8
YoY growth in loan loss provisions (%)
164.2
N.M.
-114.9
205.4
N.M.
Stable funding ratio (%)
109.3
105.6
104.8
107.4
108.9
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
2.6
4.7
5.2
5.8
3.5
101.9
102.3
101.5
98.9
98.5
2.7
4.8
5.3
5.7
3.4
spglobal.com/ratings
21
Summary Analysis
Banco Nacional de Desenvolvimento Economico e Social: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
R$
R$
R$
R$
R$
Mil.
Mil.
Mil.
Mil.
Mil.
35403
7879
547
10281
5372
142017
151073
159806
165525
155318
0
0
0
0
0
700065
654385
568445
495672
429170
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
4687
3178
3203
3524
3651
Customer loans (net)
Loan loss reserves
695378
651207
565242
492148
425518
Earning assets
877147
813000
728579
671465
589854
14357
16388
15962
14511
17174
Equity interests/participations (nonfinancial)
23129
13285
10944
7018
3753
Total assets
All other assets
930576
877219
782043
715486
624827
Adjusted assets
930552
877187
782011
715447
624827
Liabilities (category name - no data)
Total deposits
Other borrowings
21312
18188
19821
20834
21047
784414
719674
616124
556632
471522
Other liabilities
57243
49998
52780
50423
49662
Total Liabilities
862970
810943
706739
649201
550039
Equity (category name - no data)
Total equity
67606
66276
75304
66285
74788
Common shareholders' equity (reported)
30993
30737
45626
52169
61012
163
87
67
254
584
Preprovision operating income
11417
13722
11947
11558
12108
Credit loss provisions (net new)
1947
737
-74
500
164
Net income before extraordinaries
6199
8594
8150
8183
9048
0
0
0
0
0
Other items
Nonperforming assets
Extraordinary income
22
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Business Development Bank
of Canada (BDC)
Rationale
The ratings on BDC reflect our view of the
bank's critical role in supporting Canadian
entrepreneurship by providing financial and
management services to small and medium-size
enterprises (SMEs), and its integral link with the
Canadian government, leading to our assessment
of an almost certain likelihood of BDC receiving
timely and sufficient extraordinary government
support. BDC is an agent Crown corporation
(an agent of Her Majesty in right of Canada). We
also believe that the likelihood of extraordinary
support is not subject to transition risk, given
that BDC executes strategic policies on behalf of
the federal government.
BDC's support of SMEs, whose contribution is
important to the health of Canada's economy,
is a key objective of the federal government.
BDC offers loans and consulting services mainly
to SMEs that would otherwise find it difficult
to secure affordable financing, since they are
relatively small and may not have the financial
scale (especially when it comes financing)
commensurate with their opportunities. The
size of BDC's loan book would suggest that it is
a viable lending alternative for Canadian SMEs,
which are an important source of employment
and are seen as the big enterprises of the future.
Innovation, Science, and Economic Development
Canada (ISEDC) estimates that close to 50% of
Canadians work for companies that have fewer
than 20 employees and that small business
accounted for 42% of the country's GDP. We
believe that BDC operates effectively on the
governments' behalf and that, in its absence, it
is likely the federal government would undertake
the bank's activities.
Our view of the bank as having an integral link
with federal government reflects the BDC's
reporting to parliament through the minister of
Central Government Agencies 2016 | September 2016
Ratings:
AAA/Stable/A-1+
ISEDC. BDC's board members are appointed as
per the Business Development Bank of Canada
Act and on the advice of the government, to
oversee BDC's operations and implement the
government's priorities as per the corporate plan.
As with other agent Crown corporations, BDC
must submit a five-year strategic corporate plan
to the minister of ISEDC for approval. Since April
21, 2008, Canada has met all of BDC's borrowing
needs by direct lending, which underscores the
government's close relationship with the bank
and gives it a financial incentive to support BDC
during times of stress, in our view.
BDC, established in 1974 as the Federal Business
Development Bank, has continued under its
current name since 1995. The bank was created
to promote and assist in the establishment and
development of business enterprises in Canada,
particularly those that are small and midsize.
To accomplish this goal, BDC provides debt
and equity financing and consulting services,
complementing the lending available from
commercial financial institutions. Canadian
commercial banks generally limit their long-term
loan exposure to SMEs, which are considered
high risk. Therefore, BDC fills the gap by lending
at longer maturities to smaller, less-established
borrowers. The embedded credit risk of BDC's
loan portfolio is therefore higher than that of
Canadian commercial banks.
The Business Development Bank of Canada Act
established BDC as an agent Crown corporation
and empowers it to borrow. Under the Financial
Administration Act (FAA), any approved
borrowings by an agent Crown corporation are
on behalf of Her Majesty the Queen in Right of
Canada. Its debt therefore constitutes a direct
obligation of the government and is a charge
on the government's Consolidated Revenue
Fund (CRF), effectively obliging the government
Last Ratings Action
And Date
Ratings and outlook
affirmed on Dec. 21,
2015
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To support Canadian
entrepreneurship by
providing financial
and management
services to small
and medium-size
enterprises (SMEs).
Issuer Website:
www.bdc.ca
Primary Credit
Analyst:
Jennifer Love, CFA
Toronto
(1) 416-507-3285
jennifer.love@
spglobal.com
Secondary Credit
Analyst:
Stephen Ogilvie
Toronto
(1) 416-507-2524
stephen.ogilvie@
spglobal.com
Ratings At End June
2015:
AAA/Stable/A-1+
Ratings At End June
2008:
AAA/Stable/A-1+
spglobal.com/ratings
23
Summary Analysis
to service the debt on time. Borrowings and
guarantees must not exceed 12x the bank's equity.
Accordingly, we believe the company's borrowings,
even though they are normally serviced from
BDC's own resources, are obligations of the
Canadian government, with access to the CRF
ensuring timeliness of debt service payment. Debt
issued before April 1, 2008, carries a guarantee
from the government in accordance with the
bank's status as an agent Crown corporation
and the FAA. We understand that non-borrowing
liabilities arising from BDC's business activities do
not enjoy the same legal status as its borrowings.
BDC does not face policy environment pressures,
in our opinion. In fact, during the recession
following the global financial crisis, the Canadian
government encouraged the bank to play a larger
role in supporting credit provision to the private
sector as part of the temporary, countercyclical
Extraordinary Financing Framework announced in
its 2009 budget.
It is BDC's practice to maintain a level of liquid
investments equivalent to net outflow of the next
five working days at a minimum. As well, 75% of
the bank's liquid investments must mature within
the subsequent 100 days.
Outlook
The stable outlook on BDC mirrors that on Canada,
and reflects our expectation that the bank will
continue to play a key role in the government's
economic policy. Policy developments that, in our
opinion, signal a reduction of the government's
support for BDC's public policy mandate could
cause us to de-link the rating and outlook on BDC
from those on its owner. As well, a lowering of
the ratings on Canada would result in a similar
downgrade of BDC.
Business Development Bank of Canada: Selected Indicators
Year to March. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
C$
C$
C$
C$
C$
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Period
Currency
Leverage ratio (%)
22.5
22.2
21.6
20.9
20.3
Total adjusted capital/adjusted assets (%)
22.4
22.2
21.6
20.8
20.2
Net nonperforming assets/customer loans + other real estate owned (%)
N/A
N/A
N/A
N/A
N/A
Net interest income/operating revenues (%)
91.9
95.0
93.2
96.0
97.6
2.3
2.2
2.5
3.0
2.0
Core earnings/operating revenues (%)
Core earnings/ Adjusted assets (%)
47.8
46.3
50.6
59.1
42.4
Loan loss reserves/gross nonperforming assets (%)
N/A
N/A
N/A
N/A
N/A
Growth in customer loans (%)
6.7
8.2
6.9
5.8
N.M.
Growth in loss reserves (%)
4.3
-5.6
-11.8
-21.2
N.M.
Growth in adjusted assets (%)
8.0
7.5
5.6
-6.5
N.M.
YoY growth in loan loss provisions (%)
31.6
282.1
N.M.
-136.7
N.M.
Stable funding ratio (%)
25.1
25.9
27.0
30.2
39.1
Short-term wholesale funding/total wholesale funding (%)
97.7
96.5
94.5
89.8
77.8
Total wholesale funding / funding base (%)
99.8
99.8
99.8
99.8
99.9
Short-term wholesale funding/funding base (%)
97.5
96.3
94.3
89.7
77.7
24
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Business Development Bank of Canada: Summary Balance Sheet
Year to March. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
C$
C$
C$
C$
C$
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
667
677
702
741
653
Securities
408
336
437
763
3069
0
0
0
0
0
18944
17749
16410
15349
14506
530
508
538
610
775
Period
Currency
Denomination
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
18414
17241
15872
14739
13731
Earning assets
20008
18745
17539
16830
18208
Equity interests/participations (nonfinancial)
0
0
0
0
0
113
100
15
15
38
Total assets
21129
19570
18184
17220
18400
Adjusted assets
21080
19512
18149
17188
18378
25
25
28
22
18
15984
14832
13868
13224
14355
All other assets
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
340
323
332
349
266
Total Liabilities
16350
15180
14228
13595
14640
Total equity
4779
4390
3956
3625
3760
Common shareholders' equity (reported)
4745
4339
3873
3510
3613
Equity (category name - no data)
Other items
Nonperforming assets
N/A
N/A
N/A
N/A
N/A
Preprovision operating income
587
505
477
495
471
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
Central Government Agencies 2016 | September 2016
96
73
19
-38
104
491
433
458
533
367
0
0
0
0
0
spglobal.com/ratings
25
Summary Analysis
Caisse des Depots
et Consignations (CDC)
Rationale
We equalize our ratings on CDC with those on
France. We consider CDC to be a governmentrelated entity (GRE). In line with our criteria
for rating GREs, we base our view of an almost
certain likelihood of CDC receiving extraordinary
government support if needed on our
assessment of CDC's:
––Critical role in contributing to many public policy
missions on behalf of the French government
and in acting as a long-term investor supporting
the French public interest; and
––Integral link with the French government, of
which we consider CDC to be an extension. CDC
has the status of a public-sector institution,
established by a special law, which only the
French parliament can modify. Procedures in
place ensure effective governance, monitoring,
and control over CDC.
Although CDC is a separate entity, we view it
as an arm of the French government. CDC is
mandated to conduct specific public missions
and provide support in the implementation of
government policies. Since its creation, CDC's
overriding public role has been to guarantee the
financial security of the funds it manages. It is
managed prudently, with close oversight by the
French state.
CDC's six mandates are to centralize and manage
most of the regulated savings deposits collected
by French banks (primarily the Livret A); provide
long-term financing to general interest programs;
administer several public retirement schemes
and deposits of legal professions; act as the
custodian of the French social security agency;
support regional and local development; and act
as a long-term investor in affiliates and strategic
shareholdings to support government policies.
26
Central Government Agencies 2016 | September 2016
CDC is a key stakeholder in the long-term funding
of local authorities in France. In addition to
providing direct lending, it holds a 20% stake in
Société de Financement Local (SFIL). Created in
2013, SFIL is a public entity that provides loans to
regional and local governments. SFIL is also 75%
owned by the French government and 5% by La
Banque Postale. CDC is committed to providing
funding to SFIL to a maximum limit of about €10
billion. Furthermore, CDC holds a 35% stake in
La Banque Postale Développement Local, which
is partly owned by La Banque Postale. The joint
venture distributes loans to local and regional
governments and public health institutions,
with targeted annual loan production of €4
billion-€5 billion. These loans are expected to be
refinanced by SFIL.
CDC's public role was exemplified by the creation
of the Banque Publique d'Investissement (BPI
France) in 2013. BPI France is jointly owned by
CDC and the French government, and its main
mission is to support and fund investments by
French small and midsize enterprises. Apart
from BPI France, CDC's major equity investments
include: leading French life insurer CNP
Assurance, postal operator La Poste, and realestate operators Société Nationale Immobilière
and Icade. In addition, CDC has a portfolio of
highly rated bonds and equities in large listed
French companies and, to a lesser extent,
operates as a private equity investor.
In 2015, the French president announced plans
to bring Agence Francaise de Developpement
(AFD) closer to CDC. This reinforces our view of
CDC's role as the most important GRE in France.
AFD has a sovereign mandate for executing
development policy and assistance, along with
fighting extreme poverty.
Ratings:
AA/Negative/A-1+
Last Ratings Action
And Date
Ratings and outlook
affirmed on May 12,
2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To contribute to
public policy goals on
behalf of the French
government and
acting as a long-term
investor in supporting
the French public
interest.
Issuer Website:
www.
caissedesdepots.fr
Primary Credit
Analyst:
Sylvie Dalmaz, PhD
Paris
(33) 1-4420-6682
sylvie.dalmaz@
spglobal.com
Secondary Credit
Analyst:
Marie-France
Raynaud
Paris
(33) 1-4420-6754
marie-france.
raynaud@spglobal.
com
Ratings At End June
2015:
AA/Negative/A-1+
Ratings At End June
2008:
AAA/Stable/A-1+
spglobal.com/ratings
Summary Analysis
CDC is a public-sector institution defined by a
special law dating from 1816. We understand that
CDC is immune from liquidation and bankruptcy
law, and decisions on dissolution would revert
to the French government, which we consider
to be ultimately responsible for CDC's liabilities
(under Law 80-539 enacted on July 16, 1980). The
French government and CDC have very strong
links. CDC's CEO is appointed by the president
of the Republic of France for a five-year term.
Under the French Monetary and Financial Code
(article L518-2), CDC is subject to parliamentary
supervision. CDC's supervisory board comprises
members of the French parliament and senior
civil servants.
The balance sheet is typified by limited lending
activity and generally low counterparty risk.
CDC's equity portfolio is large and can lead to
swings in its net income. CDC's deposit base
is stable. Although CDC is not a bank, French
regulators have a view on its capital adequacy. In
our opinion, CDC's capitalization is constrained by
its large investments in equities.
Outlook
Our outlook on CDC is negative and mirrors that
on France. We expect that CDC will continue to
act as an arm of the French state and support
government policies, ensuring an almost certain
likelihood of support from the French authorities
should the need arise.
The ratings and outlook on CDC are expected to
move in tandem with those on France.
We could lower the ratings on CDC if we
downgraded France. Although we consider these
possibilities as remote, we could also lower the
ratings if we perceive a weakening of CDC's links
with and role for the French state or if we saw
deterioration in CDC's financial profile that we
believed would call into question the institution's
ability to carry out its public policy role.
Caisse des Depots et Consignations: Selected Indicators
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
16.6
17.0
16.8
11.5
12.0
Total adjusted capital/adjusted assets (%)
16.4
16.8
16.7
12.3
12.9
3.7
2.8
3.3
3.9
3.8
Net interest income/operating revenues (%)
9.3
9.4
12.4
75.3
52.8
Core earnings/ Adjusted assets (%)
0.8
1.3
0.7
-0.4
0.4
Net nonperforming assets/customer loans + other real estate owned (%)
Core earnings/operating revenues (%)
31.6
41.4
28.8
-18.7
12.1
Loan loss reserves/gross nonperforming assets (%)
56.3
52.2
54.2
53.3
53.1
Growth in customer loans (%)
-18.4
20.1
20.2
3.9
-67.9
Growth in loss reserves (%)
44.5
-12.6
12.5
3.0
98.0
4.2
4.5
-46.3
9.8
-2.8
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
2300.0
-87.3
-73.3
198.6
360.0
121.5
122.5
126.0
108.8
104.9
Short-term wholesale funding/total wholesale funding (%)
58.6
61.7
55.8
46.9
61.4
Total wholesale funding / funding base (%)
49.8
54.7
51.4
52.1
47.8
Short-term wholesale funding/funding base (%)
29.2
33.7
28.7
24.4
29.3
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
27
Summary Analysis
Caisse des Depots et Consignations: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
3453
3811
2990
7031
5602
86271
72873
71070
191846
186718
8683
12783
14402
4678
6283
10542
12919
10756
8947
8612
484
383
399
378
352
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
10058
12536
10357
8569
8260
108915
102370
98893
208830
207210
Equity interests/participations (nonfinancial)
2257
2343
2320
839
3720
All other assets
4767
5841
6737
47023
28993
Earning assets
Total assets
155844
149573
143089
286648
262263
Adjusted assets
154998
148733
142281
265137
241471
Total deposits
67224
60875
69748
71987
63958
Other borrowings
42823
44507
31837
30585
31285
Liabilities (category name - no data)
Other liabilities
10551
10704
10341
145285
132322
Total Liabilities
120705
116112
111995
247895
227617
Total equity
35139
33461
31094
38753
34646
Common shareholders' equity (reported)
31568
29824
27460
23695
21168
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
28
Central Government Agencies 2016 | September 2016
859
734
736
709
663
1918
2473
1407
-152
1460
168
7
55
206
69
1371
1793
2137
-458
206
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
Canada Mortgage and
Housing Corp. (CMHC)
Rationale
The ratings on CMHC reflect S&P Global Ratings'
view of the following factors:
––CMHC's critical role in implementing the
government's housing policy and its integral link
with the federal government;
––Our assessment that the likelihood of CMHC
receiving extraordinary government support is
almost certain;
––CMHC's status as an agent Crown corporation
(an agent of Her Majesty in right of Canada)
100% owned by the government of Canada; and
––The provisions under various acts that establish
that CMHC's borrowings constitute a direct
obligation of the government and represent
a charge on, and are payable out of, the
government's consolidated revenue fund.
We view CMHC as a government-related entity
(GRE) because we believe that the likelihood
of CMHC receiving extraordinary government
support in a period of financial distress is almost
certain. Following our GRE criteria, we base our
almost certain determination on our assessment
of CMHC's critical role in implementing the
government's housing policy. We also base the
determination on our assessment of the integral
link between the government and corporation, as
seen in the government's on-lending to CMHC of
its borrowing requirements, its appointment of
the board of directors, approval of the strategic
direction of the corporation, and mandate letters
to the minister responsible for CMHC and the
power to issue directives.
CMHC was established as an agent Crown
corporation in 1946 to carry out the provisions of
the National Housing Act (NHA). The corporation's
Central Government Agencies 2016 | September 2016
Ratings:
AAA/Stable/A-1+
mandate is to promote the construction,
modernization, and affordability of housing;
facilitate the access to and affordability and
well-being of the national housing finance market;
and promote the efficiency and competitiveness
of the housing finance system and the stability
of the financial system. The government expects
CMHC to focus its activities on the Canadian
housing and housing finance market. Specifically,
key mandated roles are lending and providing
subsidies to national affordable housing
programs, insuring against borrower default on
residential mortgages, and securitizing insured
mortgages.
We consider the corporation to be an important
vehicle for public policy. Because the CMHC has
no legislated monopoly on mortgage credit or
insurance, it does not face policy environment
pressures, in our opinion. On the contrary, during the
recession, the Canadian government required the
corporation to play a larger role in housing finance.
The corporation benefits from a supportive
relationship with the government, its sole owner.
Since April 21, 2008, Canada has met CMHC's
borrowing needs by direct lending (consolidating
the corporation's borrowing with that of Canada).
Moreover, we believe the government has
mechanisms in place to provide the corporation
with timely support if necessary. Approved
borrowings by agent corporations are a charge on
and payable out of the consolidated revenue fund
under the Financial Administration Act. CMHC is
an agent Crown corporation under the CMHC Act.
We consider this arrangement timely, irrevocable,
and unconditional and stronger than a guarantee.
Canada Mortgage Bonds (CMBs) are issued by
Canada Housing Trust, whose accounts (including
borrowings) are consolidated with those of CMHC.
The corporation guarantees the timely payment of
interest and principal of CMBs.
Last Ratings Action
And Date
Ratings and outlook
affirmed on Jan. 29,
2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To implement the
Canadian government's
housing policy.
Specifically, to promote
the construction,
modernization,
and affordability of
housing; to facilitate
the access to and
affordability and wellbeing of the national
housing finance
market; and promote
the efficiency and
competitiveness of the
housing finance system
and the stability of the
financial system.
Issuer Website:
www.cmhc-schl.gc.ca
Primary Credit
Analyst:
Stephen Ogilvie
Toronto
(1) 416-507-2524
stephen.ogilvie@
spglobal.com
Secondary Credit
Analyst:
Jennifer Love, CFA
Toronto
(1) 416-507-3285
jennifer.love@
spglobal.com
Ratings At End June
2015:
AAA/Stable/A-1+
Ratings At End June
2008:
AAA/Stable/--
spglobal.com/ratings
29
Summary Analysis
Hence, the government is cognizant of the
associated risks from CMHC. The federal
government has progressively introduced
measures aimed at limiting the risk of mortgagemarket problems, including requiring a 20%
down-payment on non-owner-occupied property
or refinancing. In addition, the government
intends to prohibit the use of any taxpayer-backed
insured mortgage loan, both high and low ratio,
as collateral in securitization vehicles that the
corporation doesn't sponsor.
Outlook
The stable outlook on CMHC mirrors that on
Canada, and reflects our expectation that the
corporation will continue to play a critical role
in Canadian public policy over the next two
years. Policy developments that we believe
signal declining federal government support
for the corporation, such as a change to
CMHC's legislation that would make its future
obligations no longer those of the government,
would cause us to reassess our view of CMHC's
role and link, or even detach the rating and
outlook on the corporation from those on its
owner and determine a stand-alone credit
profile for CMHC. A downgrade of Canada would
also lead to a downgrade of the corporation
under our GRE criteria.
Canada Mortgage and Housing Corp.: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
C$
C$
C$
C$
C$
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
7.5
7.0
5.5
4.4
3.8
Period
Currency
Leverage ratio (%)
7.5
7.0
5.5
4.4
3.8
Net nonperforming assets/customer loans + other real estate owned (%)
Total adjusted capital/adjusted assets (%)
N/A
N/A
N/A
N/A
N/A
Net interest income/operating revenues (%)
N/A
N/A
N/A
N/A
N/A
Core earnings/ Adjusted assets (%)
0.6
1.1
0.7
0.6
0.5
34.2
44.7
37.9
35.4
33.6
N/A
N/A
N/A
N/A
N/A
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
Growth in loss reserves (%)
Growth in adjusted assets (%)
1.5
-9.8
-8.3
-0.6
0.7
N.M.
N.M.
N.M.
N.M.
N.M.
1.5
-8.0
-7.5
0.1
1.4
YoY growth in loan loss provisions (%)
N.M.
N.M.
N.M.
N.M.
N.M.
Stable funding ratio (%)
63.2
63.1
54.6
55.7
59.8
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
30
Central Government Agencies 2016 | September 2016
43.2
43.6
50.3
48.2
43.3
100.0
100.0
100.0
100.0
100.0
43.2
43.6
50.3
48.2
43.3
spglobal.com/ratings
Summary Analysis
Canada Mortgage and Housing Corp.: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
C$
C$
C$
C$
C$
Mil.
Mil.
Mil.
Mil.
Mil.
2216
2580
1647
1592
1804
23315
22872
21115
20647
18849
0
0
0
0
0
224668
221447
245572
267718
269321
0
0
0
0
0
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
224668
221447
245572
267718
269321
Earning assets
248179
244730
266998
288737
288573
Equity interests/participations (nonfinancial)
All other assets
0
0
0
0
0
783
466
475
717
520
Total assets
252107
248490
270051
292040
291890
Adjusted assets
252107
248490
270051
292040
291890
0
0
0
0
0
223352
221289
245196
267778
269123
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
8419
8694
8926
9993
10404
Total Liabilities
232468
230308
254213
278196
279799
Total equity
19639
18182
15838
13844
12091
Common shareholders' equity (reported)
19639
18182
15838
13844
12091
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
Central Government Agencies 2016 | September 2016
N/A
N/A
N/A
N/A
N/A
1964
3487
2413
2268
2082
0
0
0
0
0
1488
2625
1829
1699
1529
0
0
0
0
0
spglobal.com/ratings
31
Summary Analysis
Cassa Depositi
e Prestiti SpA
Rationale
The ratings on CDP reflect our opinion that
there is an almost certain likelihood that the
Italian government would provide timely and
sufficient extraordinary support to CDP in the
event of financial distress. We therefore continue
to equalize our long-term rating on CDP with
that on Italy. In accordance with our criteria for
government-related entities, including CDP, our
rating approach is based on our view of CDP's:
––Integral link with the Italian government. We
view CDP as the government's financial agency,
in charge of implementing the government's
financial policy. The Italian government is
legally required to be the majority owner
and currently holds an 80.1% stake in CDP. It
provides an explicit guarantee on most of CDP's
obligations and exercises tight supervision and
control of CDP; and
––Critical role for the Italian government through
its public policy mandate. CDP has become a
key instrument for implementing the central
government's financial policies, including
support to small and midsize enterprises
(SMEs), co-financing of infrastructure projects
in line with national interests, control of equity
stakes in strategic sectors, and privatization
of public-sector companies. CDP is, by far, the
main funding source for regional governments,
local authorities, and public-law entities.
Overall, CDP's exposure to general government
risk on the asset side is very high, accounting
for some 78% of its loan portfolio. We
understand CDP's role will now be expanded to
encompass the financing of Italy's international
development policies, in coordination with the
Italian Ministry of Foreign Affairs.
Segregated activity accounts for more than
90% of CDP's loan book and ordinary activity,
32
Central Government Agencies 2016 | September 2016
Ratings:
BBB-/Stable/A-3
Last Ratings Action
And Date
Ratings affirmed on
Dec. 21, 2015
the remainder of lending. The segregated
activity is mainly funded through sovereignguaranteed savings from Italian households.
Through its segregated activity, CDP provides
funding to various layers of the Italian
government, including the central, regional,
and local governments, and public-law entities.
These public finance loans represent CDP's
traditional, publicly mandated lending activity.
The segregated activity typically aims to finance
capital investments and, more recently, to also
improve average payment periods of local and
regional governments (LRGs)' supplier debt.
The risk profile of CDP's public finance portfolio
benefits from the sound fundamentals of Italy's
LRG tier. Since 2011, the central government
has cut transfers to LRGs amid increasing fiscal
austerity, but the LRGs have generally managed
to preserve a sound revenue-expenditure
match. Moreover, CDP handles its public finance
portfolio under favorable legislation that
prompts timely payment of financial obligations
at the LRG level.
We understand that CDP will continue to
play a key role in financing the Italian public
sector, and will further reinforce, in our
view, the importance of its role as the Italian
government's main tool to promote economic
development. We understand CDP will focus
on infrastructure development, fostering the
growth and internationalization of Italian
businesses while intensifying its activity in the
Italian real estate market, particularly regarding
social housing, tourism infrastructure, and
urban redevelopment initiatives.
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
CDP is a key
instrument of the
central government to
implement its financial
policies, including
support to SMEs,
infrastructure projects,
funding for LRGs and
public law entities, etc.
Issuer Website:
www.cdp.it
Primary Credit Analyst:
Alejandro Rodriguez
Anglada
Madrid
(34) 91-788-7233
alejandro.rodriguez.
[email protected]
Secondary Credit
Analyst:
Mirko Sanna
Milan
(39) 02-72111-275
mirko.sanna@spglobal.
com
Ratings At End June
2015:
BBB-/Stable/A-3
Ratings At End June
2008:
A+/Stable/A-1+
Ordinary activity loans are financed through
borrowings without explicit sovereign
guarantees, in which CDP provides funding to
companies and private- or public-infrastructure
concessionaires.
spglobal.com/ratings
Summary Analysis
For non-public-finance activities, CDP's
investment decisions hinge on long-term
economic value, which could increase risks
linked to the loan portfolio. CDP is able to
mitigate the risks associated with loans to SMEs
because it is exposed only to the domestic
banking system, which in turn lends CDP funds
to SMEs. In addition, CDP further strengthens its
risk position with collateral for SME loans.
ensure payments on unguaranteed obligations.
We think this internal transaction would not
increase the default probability on guaranteed
obligations. All in all, we assume that even the
unguaranteed portion of CDP's obligations
would be serviced pari passu with the
segregated activity obligations, and therefore
with the sovereign's own obligations.
Outlook
In our view, the increasing scope of CDP's
activities beyond traditional public-finance
operations underlines its nature as a financial
agency. We also think the broadening range of
activity indicates the government's desire to
make increased use of the extensive liquidity
available to CDP. We believe cash flow from
segregated assets could be lent internally to
The stable outlook on CDP reflects the stable
outlook on Italy, and a rating action on Italy
would be mirrored on CDP. In addition, we
might lower the ratings on CDP if we observed
significant weakening in its link with or role for
the government, and in turn, a lower likelihood
of government support in the event of financial
distress.
Cassa Depositi e Prestiti SpA: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
6.0
6.4
5.9
5.8
5.9
Total adjusted capital/adjusted assets (%)
6.0
6.4
5.9
5.9
5.9
Net nonperforming assets/customer loans + other real estate owned (%)
0.1
0.1
0.2
0.1
0.0
7.0
8.3
31.5
63.4
55.2
N/A
0.7
0.9
1.0
0.8
Period
Currency
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
N/A
24.3
32.0
59.5
56.6
Loan loss reserves/gross nonperforming assets (%)
70.7
63.0
33.5
53.1
62.5
Growth in customer loans (%)
Growth in loss reserves (%)
2.2
-1.3
-1.2
8.1
6.5
24.5
94.4
44.1
11.6
25.2
Growth in adjusted assets (%)
-1.1
17.7
3.7
12.5
10.1
YoY growth in loan loss provisions (%)
-4.1
132.1
143.2
192.1
99.6
186.4
188.2
180.4
172.0
173.7
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
20.0
17.2
50.2
63.5
71.0
Total wholesale funding / funding base (%)
16.8
14.4
13.8
17.0
13.2
3.4
2.5
6.9
10.8
9.3
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
33
Summary Analysis
Cassa Depositi e Prestiti SpA: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
186506
194945
161727
155222
144500
32829
30026
24904
22960
12005
0
0
0
0
0
103767
101487
102858
104116
96292
286
230
118
82
74
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
103481
101258
102739
104033
96218
Earning assets
166754
177049
153486
145130
124541
Equity interests/participations (nonfinancial)
17190
19464
20474
20770
18775
All other assets
13474
12782
12829
10724
2591
Total assets
397898
401680
340467
328551
287143
Adjusted assets
388829
393025
333995
322092
286372
308643
315524
286215
276855
239678
30086
26915
13568
13218
12887
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
18908
21543
16741
16153
8047
Total Liabilities
364317
366523
316967
307494
268794
Total equity
33581
35157
23501
21057
18349
Common shareholders' equity (reported)
19227
21371
19295
18183
15525
Equity (category name - no data)
Other items
Nonperforming assets
405
365
353
155
118
Preprovision operating income
-87
3496
4155
4440
3071
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
34
Central Government Agencies 2016 | September 2016
120
125
54
22
8
-2248
1158
2501
2924
2167
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
China Development Bank
(CDB)
Rationale
The rating on CDB reflects our view that there
is an almost certain likelihood that the Chinese
government would provide timely and sufficient
extraordinary support to CDB in the event of the
bank facing financial distress. We have therefore
equalized our issuer credit rating on CDB with the
sovereign credit rating on China.
In accordance with our criteria for governmentrelated entities, our rating approach is based on
our view of CDB's:
––Integral link with the Chinese government,
through 100% ownership and ongoing
government intervention. The government drives
CDB's business strategy, determines its growth
target, appoints its senior management, and
approves its budget; and
––Critical role as the government's key vehicle
for development finance. CDB is a key provider
of development finance in China. The bank
also provides development finance to many
developing countries to which China has
economic ties.
After the Chinese government approved the
bank's reform plan in March 2015, CDB officially
discontinued its commercialization process
and repositioned itself as a financial institution
specialized in development finance. This move
was followed by the People's Bank of China's
(PBoC's) capital injection of $48 billion and the
China Banking Regulatory Commission's official
assignment of zero-risk weighting to CDB bonds.
In December 2008, CDB became a joint-stock
bank largely for exploring new ways to better
finance the government's key development
initiatives. CDB remained wholly owned by the
central government through the Ministry of
Central Government Agencies 2016 | September 2016
Ratings:
AA-/Negative/A-1+
Finance, Central Huijin Investment Ltd., and
the National Council for Social Security Fund.
The Chinese government's response to the
global financial crisis has since solidified CDB's
instrumental role in development finance. In
turn, this has triggered debates among Chinese
policymakers about the necessity and feasibility
of CDB's commercialization and eventually led to
its repositioning.
CDB's quasi-policy role and the government's
unchanged backing highlight the bank's critical
importance to the Chinese economy at a time when
the government is leveraging on the balance sheets
of policy banks to sustain economic growth. The
government's role appears likely to continue to
underpin the bank's solid business position.
CDB is much bigger than the other two policy
banks that the Chinese central government
controls. In recent years, CDB's robust growth
was supported by a stable customer base and
multi-pillar development strategy. In addition
to traditional lending to domestic infrastructure
and pillar industries, CDB is building up its
overseas presence, exploring comprehensive
development finance solutions for projects,
and channeling massive funds from the central
bank and other institutions to social housing
and urban redevelopment. We expect the
bank's revenue to grow steadily as China's
development stage necessitates solid demand
for development finance.
Nevertheless, we believe ensuing strong asset
growth may put CDB's stand-alone credit profile
to the test. Despite a one-time capital boost
from PBoC's equity injection, we expect CDB's
capitalization to stay at best moderate over
the next two years, partly because we expect
strong credit growth. An additional driver is the
possible shift in CDB's asset mix towards many
Last Ratings Action
And Date
Outlook revised to
Negative on Apr. 1,
2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
CDB is the Chinese
government's
key vehicle for
development finance.
The bank also provides
development finance
to many developing
countries to which
China has economic
ties.
Issuer Website:
www.cdb.com.cn
Primary Credit
Analyst:
Harry Hu, CFA
Hong Kong
(852) 2533-3571
harry.hu@
spglobal.com
Secondary Credit
Analyst:
Qiang Liao, PhD
Beijing
(86) 10-6569-2915
qiang.liao@
spglobal.com
Ratings At End June
2015:
AA-/Stable/A-1+
Ratings At End June
2008:
A/Positive/A-1
spglobal.com/ratings
35
Summary Analysis
risky segments, such as equity investment in
The bank's reliance on long-term bonds for
infrastructure projects and industrial firms, urban
funding doesn't pose significant funding and
redevelopment loans, and overseas project lending. liquidity risks, in our opinion. Our view is based
on the ongoing credit support from the central
Rising credit risks in the Chinese economy could
government, ongoing access to and potential
also undermine CDB's capitalization on a riskliquidity support from the central bank, and
adjusted basis, other things being equal.
the sustained demand for CDB bonds in a
financial system, where the availability of similar
CBD's fast credit growth may pressure its
instruments is limited.
asset quality in the long term. While the bank's
nonperforming loan ratio remains very low, this
Outlook
is mainly due to the long-dated nature of its
The negative outlook mirrors that of China. If the
loan book and the dilutive effect from rapid loan
ratings on China is lowered, the ratings on bank
growth. We believe the bank's actual credit losses would also be lowered. Should the outlook on
could be much higher than currently reported
China revert to stable, the outlook on the bank
once its loan book becomes fully seasoned.
would also revert to stable.
China Development Bank: Selected Indicators
Period
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
CNY
CNY
CNY
CNY
CNY
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
8.9
6.8
7.1
6.9
7.4
Leverage ratio (%)
8.3
6.4
6.8
6.5
6.8
Total adjusted capital/adjusted assets (%)
8.3
6.4
6.8
6.5
6.8
Net nonperforming assets/customer loans + other real estate owned (%)
-2.9
-2.8
-2.5
-2.5
-1.7
Net interest income/operating revenues (%)
63.6
80.2
96.4
90.2
101.0
0.8
1.0
1.0
0.8
0.7
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
41.9
44.1
45.0
36.8
39.8
421.2
454.4
523.4
704.0
422.1
Growth in customer loans (%)
15.9
11.1
11.4
16.1
22.5
Growth in loss reserves (%)
25.4
24.7
20.7
47.2
30.5
Growth in adjusted assets (%)
22.3
26.0
8.9
20.3
22.3
YoY growth in loan loss provisions (%)
28.3
43.8
-32.6
92.1
49.5
105.6
97.6
87.9
87.1
87.1
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
22.5
26.5
23.2
25.2
22.6
Total wholesale funding / funding base (%)
84.7
89.6
92.2
92.4
92.7
Short-term wholesale funding/funding base (%)
19.1
23.7
21.4
23.3
21.0
36
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
China Development Bank: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
CNY
CNY
CNY
CNY
CNY
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
2195573
2146744
791590
843580
504292
Securities
1212432
289122
227550
204811
171587
110976
19495
87469
72433
36712
9206949
7941642
7148281
6417578
5525872
341589
272291
218313
180855
122890
8865360
7669351
6929968
6236723
5402982
12461998
10339603
8212034
7447779
6193465
Period
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
Earning assets
Equity interests/participations (nonfinancial)
0
0
0
0
0
120505
82190
53788
71238
72308
Total assets
12619022
10316354
8187238
7519594
6251506
Adjusted assets
12616976
10314528
8185468
7517893
6249931
Total deposits
3782683
3021572
1583289
1532245
1200801
Other borrowings
7395478
6363942
5843128
5305034
4479501
All other assets
Liabilities (category name - no data)
Other liabilities
341773
222641
174496
167396
119699
Total Liabilities
11549418
9636190
7626003
7021743
5807006
Total equity
1069604
680164
561235
497851
444500
Common shareholders' equity (reported)
1063671
666933
558491
495673
442777
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
Central Government Agencies 2016 | September 2016
81091
59926
41712
25690
29117
237112
211824
167839
162124
107460
72253
56323
39159
58075
30235
103705
98100
79621
62866
45784
0
0
0
0
0
spglobal.com/ratings
37
Summary Analysis
Czech Export Bank
(CEB)
Rationale
––The ratings on CEB mirror those on the Czech
Republic, and reflect our opinion that there
is an almost certain likelihood that the Czech
government will provide timely extraordinary
support to CEB, sufficient to meet its debt
obligations, in case of financial distress. Under
our criteria for government-related entities, the
almost certain likelihood is based on our view of
CEB's: Critical role in supporting Czech exports
to countries with high political and economic
risk, which cannot be readily undertaken by a
private entity; and
––Integral link with the Czech government via
sovereign ownership, government control of
the board of directors, the sovereign's ultimate
irrevocable guarantee for CEB's financial
obligations, and the proven track record of
adequate financial support in all circumstances.
Established in March 1995, CEB is a 100% statesupported government export credit agency. Of
CEB's share capital, currently 80% is held by the
Czech government and the remaining 20% by the
fully state-owned Export Guarantee and Insurance
Corp. (EGAP). Although CEB's ownership structure
may change, if, for example, EGAP returns its
shares to the central government, we believe the
entity will remain under tight supervision from the
central government. By law, at least two-thirds of
CEB must be owned directly by the state.
Since the parliamentary elections in late 2013,
CEB's management and supervisory board have
changed significantly, bringing in new members
with extensive banking experience. We view these
reshuffles as underlining the close relationship
between the government and the bank.
Nevertheless, we observe that, following
an economic contraction in Russia, the main
market for CEB and the destination of about 34%
38
Central Government Agencies 2016 | September 2016
Ratings:
AA-/Stable/A-1+
of CEB loans, the share of exports supported
by CEB has dropped significantly, exacerbated
by the availability of cheap funding from
commercial banks. In 2014, CEB's new
commitments accounted for 0.3% of Czech
exports, down from at least 1% during the
previous five years.
CEB continues to benefit from its sustained track
record of receiving sufficient financial support
from the central government in the form of capital
injections and subsidies. The government also
provides subsidies to cover losses remaining after
insurance payments from EGAP and participation
payments from exporters.
CEB also benefits from a statutory guarantee by
the central government, which covers all financial
resources used for export financing. Although
we don't view this guarantee as timely, we
consider it to be a sign of the Czech government's
commitment to provide support to CEB if needed.
As a part of its political mandate, the bank
maintains low profitability and is exposed to
overseas counterparties with relatively high credit
risk, as well as to the cyclicality of the liquidity
situation in the Czech capital market. Positively,
however, almost 95% of extended loans are
insured by EGAP.
CEB is also exposed to single-name risk; we view
its loan portfolio as very concentrated, since
its top 20 exposures accounted for over 80%
of its loans and commitments and the top five
exposures exceeded 50%.
Last Ratings Action
And Date
Ratings and outlook
affirmed on Oct. 8,
2015
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To implement the
government's
public policy goal of
supporting exports
to countries with
heightened political
and economic risk.
Issuer Website:
www.ceb.cz
Primary Credit
Analyst:
Felix Winnekens
Frankfurt
(49) 69-33-999-245
felix.winnekens@
spglobal.com
Secondary Credit
Analyst:
Felix Ejgel
London
(44) 20-7176-6780
felix.ejgel@spglobal.
com
Ratings At End June
2015:
AA-/Stable/A-1+
Ratings At End June
2008:
A/Stable/A-1
Being a non-deposit-taking institution, CEB
relies on wholesale funding, particularly bonds.
We continue to view its liquidity as satisfactory,
with broad liquid assets covering short-term
wholesale funding.
spglobal.com/ratings
Summary Analysis
Nevertheless, CEB's capitalization compares
favorably with domestic peers', in our view,
particularly given EGAP's and the central
government’s guarantees
Outlook
The stable outlook reflects our expectations that
CEB's role in implementing the government's
public policy goal in supporting exports to
countries with heightened political and economic
risk will remain intact in the medium term,
supporting our view of an almost certain likelihood
of extraordinary government support.
We may lower the ratings on CEB if we observe
that its role in promoting Czech exports is
diminishing. We could come to such a conclusion
if we see a weakening of CEB's legal status, or
government statements or actions indicating that
the entity's importance has diminished.
Because we equalize our ratings on CEB with
those on the Czech Republic, any change in the
sovereign ratings could lead to a corresponding
change in those on CEB.
Czech Export Bank: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
CZK
CZK
CZK
CZK
CZK
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
24.3
N/A
N/A
N/A
N/A
Leverage ratio (%)
5.8
5.4
5.4
6.3
6.7
Total adjusted capital/adjusted assets (%)
5.8
5.4
5.3
6.3
6.7
Period
Currency
Net nonperforming assets/customer loans + other real estate owned (%)
50.1
31.5
14.0
11.0
12.7
Net interest income/operating revenues (%)
28.7
100.8
48.8
126.0
129.9
Core earnings/ Adjusted assets (%)
-0.1
0.2
-0.2
0.1
0.2
Core earnings/operating revenues (%)
-2.3
9.9
-6.0
6.2
13.6
Loan loss reserves/gross nonperforming assets (%)
18.8
15.2
31.9
14.9
10.7
Growth in customer loans (%)
-6.7
4.2
21.7
3.4
18.5
Growth in loss reserves (%)
81.4
-9.9
296.1
30.8
174.4
Growth in adjusted assets (%)
-9.5
2.8
14.2
7.0
20.5
486.5
-75.4
289.6
23.5
244.2
Stable funding ratio (%)
89.8
92.9
94.1
96.5
90.4
Short-term wholesale funding/total wholesale funding (%)
19.2
17.1
15.5
15.3
18.7
Total wholesale funding / funding base (%)
98.7
98.7
97.7
93.8
90.3
Short-term wholesale funding/funding base (%)
18.9
16.9
15.2
14.3
16.8
YoY growth in loan loss provisions (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
39
Summary Analysis
Czech Export Bank: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
CZK
CZK
CZK
CZK
CZK
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
5312
7204
7144
5907
5495
Securities
6163
7306
7231
8300
5405
307
136
253
769
816
81266
87135
83649
68734
66459
8438
4651
5161
1303
996
Customer loans (net)
72828
82484
78488
67431
65463
Earning assets
91170
98559
98238
83078
76213
Period
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Equity interests/participations (nonfinancial)
0
0
0
0
0
3973
737
773
455
571
Total assets
88686
98022
95324
83494
78063
Adjusted assets
88632
97971
95268
83412
77986
2168
5441
2446
5277
8635
79344
84784
84947
71059
62244
All other assets
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
2241
2989
3432
2916
3239
Total Liabilities
83753
93214
90825
79252
74118
Total equity
4933
4808
4499
4242
3945
Common shareholders' equity (reported)
4933
4808
4499
4242
3945
Equity (category name - no data)
Other items
44932
30657
16160
8747
9327
Preprovision operating income
4542
1185
2890
926
871
Credit loss provisions (net new)
3730
636
2583
663
537
-141
168
-202
83
161
0
0
0
0
0
Nonperforming assets
Net income before extraordinaries
Extraordinary income
40
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
DAMU Entrepreneurship
Development Fund JSC (DAMU)
Rationale
The ratings reflect our view that, given DAMU's
mandate to support and develop the small and
midsize enterprise (SME) sector in Kazakhstan,
it remains a core institution within the Baiterek
group, which is broadly tasked with supporting
Kazakhstan's economic development and
diversification. In addition, the ratings reflect
our view of an extremely high likelihood that the
government of Kazakhstan would provide timely
extraordinary support to DAMU in a financial
stress scenario.
DAMU is one of the largest entities within the
Baiterek group of development institutions, with
capital exceeding 10% of the group's consolidated
capital at year-end 2015. The government of
Kazakhstan fully owns that group via its 100%
stake in JSC National Management Holding
Baiterek, which fully owns its subsidiaries,
including DAMU. Given DAMU's mandate to
support the development of the SME sector in
Kazakhstan, we view it as a core institution within
the group and consequently equalize our ratings
on DAMU with our assessment of the group credit
profile.
We believe there is an extremely high likelihood
that the government would provide timely
extraordinary support to DAMU if needed, based
on DAMU's:
––Integral link with the government of Kazakhstan.
DAMU was established in 1997 by presidential
decree. DAMU's status is reflected in the law
On Private Entrepreneurship, which references
the fund as an institution contributing to
entrepreneurship development on behalf of
the government. We do not expect DAMU to be
privatized in the foreseeable future; and
Central Government Agencies 2016 | September 2016
Ratings:
BBB-/Negative/A-3
––Very important role for the government as
the institution supporting the SME sector in
Kazakhstan. The government has set out the
expansion of the sector as a priority for the
development and diversification of the Kazakh
economy, reflected in the importance of the
sector in several strategic state programs and
presidential speeches. DAMU is the key vehicle
for implementing the government's Business
Roadmap 2020 program. The fund is also
involved in implementing the government's Nurly
Zhol program.
DAMU deploys a range of instruments to facilitate
the development of the SME sector in Kazakhstan.
Unlike in the past, the fund does not currently
provide direct lending to SMEs. Its key activity
instead is the conditional placement of funds with
commercial banks at low rates, which are then
extended by the banks to end borrowers.
Apart from extending government funds, DAMU
also works with international financial institutions
to facilitate the support of the SME sector. During
the last two years, the institution has attracted
US$350 million from the Asian Development
Bank (ADB) and placed it with commercial banks.
We understand that the fund plans on further
borrowing from ADB as well as from the World
Bank and European Investment Bank.
In the past, the government has extended support
to DAMU, even though the last capital injection
took place in 2012, when DAMU's previous owner,
Samruk-Kazyna, increased the fund's capital
by KZT28 billion. We understand that there are
currently no capital injections planned, but this
might change, given DAMU's plans to further
expand support to SMEs over the next several
years.
Last Ratings Action
And Date
Ratings and outlook
affirmed on Jun. 30,
2016
SACP:
b
LOS:
Extremely high
Role:
Very important
Link:
Integral
Key Policy Role:
DAMU is the key
vehicle channeling
government support
to the SME sector
and manufacturing
industry, and for
implementing
the government's
Business Roadmap
2020 program. The
expansion of the SME
sector is a priority for
the development and
diversification of the
Kazakh economy.
Issuer Website:
www.damu.kz
Primary Credit
Analyst:
Maxim Rybnikov
London
(44) 20-7176 7125
maxim.rybnikov@
spglobal.com
Secondary Credit
Analyst:
Annette Ess, C
Frankfurt
(49) 69-33-999-157
annette.ess@
spglobal.com
Ratings At End June
2015:
BBB/Negative/A-2
Ratings At End June
2008:
N/A
spglobal.com/ratings
41
Summary Analysis
We also note that DAMU is one of the few state
institutions in Kazakhstan that have a sovereign
guarantee on some of its borrowing. Specifically,
the government guarantees the fund's
borrowings from the ADB. We understand that
potential future borrowing from the World Bank
could also receive a sovereign guarantee.
DAMU lends to about 20 large and midsize
commercial banks in Kazakhstan out of 35
registered banks. Therefore its main credit risk
reflects the creditworthiness of the Kazakh
banking sector because the banks bear the risk of
ultimate SME borrowers. All but one of the loans
to banks as of June 1, 2016, were performing.
Our assessment of DAMU's business position as
moderate reflects its medium size, established
business model, and its concentration in the
SME sector. DAMU's scale is comparable with
midsize commercial banks in Kazakhstan as of
March 31, 2016.
Outlook
Our assessment of DAMU's risk position as
moderate balances the fund's concentrated
exposure to Kazakhstan's commercial banks
and its growing exposure to SMEs through
provision of guarantees against its sound risk
management practices.
The negative outlook mirrors that on the sovereign
ratings. We would likely raise or lower the ratings
on DAMU if we raised or lowered our ratings on
Kazakhstan over the next two years.
Additionally, we could also lower the ratings
if, contrary to our current expectations, we
no longer viewed DAMU as a core institution
within the Baiterek group or if the potential
for timely extraordinary government support
to the institution or to the group reduced.
Among other things, this could result from:
DAMU Entrepreneurship Development Fund: Selected Indicators
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
KZT
KZT
KZT
KZT
KZT
000s
000s
000s
000s
000s
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
28.7
37.4
47.8
42.7
23.8
Total adjusted capital/adjusted assets (%)
25.4
37.2
47.8
42.7
23.8
Net nonperforming assets/customer loans + other real estate owned (%)
81.5
1508.8
879.6
644.4
134.1
Net interest income/operating revenues (%)
49.4
73.5
76.6
97.3
96.7
4.4
1.9
2.1
1.9
1.8
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
63.1
41.1
42.5
57.6
58.6
Loan loss reserves/gross nonperforming assets (%)
97.0
65.7
65.2
66.7
70.2
-10.3
-10.0
-8.4
-29.4
-35.6
31.5
4.7
-6.9
-13.8
-17.8
Growth in customer loans (%)
Growth in loss reserves (%)
Growth in adjusted assets (%)
59.3
31.7
-6.1
-6.6
-11.7
YoY growth in loan loss provisions (%)
N.M.
N.M.
N.M.
N.M.
N.M.
144.0
113.8
127.0
135.5
113.8
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
42
Central Government Agencies 2016 | September 2016
10.8
17.4
24.6
21.5
25.1
100.0
100.0
100.0
100.0
100.0
10.8
17.4
24.6
21.5
25.1
spglobal.com/ratings
Summary Analysis
DAMU Entrepreneurship Development Fund: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
KZT
KZT
KZT
KZT
KZT
000s
000s
000s
000s
000s
81816
55983
45409
53168
9758
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
8983
12144
12214
15747
14517
206391
142628
102317
102442
161555
Customer loans (gross)
2817
3139
3487
3806
5393
Loan loss reserves
2715
3034
3287
3531
4096
Customer loans (net)
Earning assets
Equity interests/participations (nonfinancial)
102
105
200
274
1297
301298
205415
152519
161887
183128
0
0
0
0
0
8024
6452
5973
5469
4888
Total assets
355306
223054
169329
180198
192997
Adjusted assets
355029
222850
169212
180143
192916
Liabilities (category name - no data)
0
0
0
0
0
Total deposits
0
0
0
0
0
250944
130543
87854
102110
146111
All other assets
Other borrowings
Other liabilities
7380
8963
1405
1226
1013
Total Liabilities
260133
139911
89259
103336
147124
Equity (category name - no data)
0
0
0
0
0
Total equity
95173
83143
80070
76862
45872
Common shareholders' equity (reported)
95173
83143
80070
76862
45872
0
0
0
0
0
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
policy changes that weaken the fund's role and
correspondingly the importance of its credit
standing to the government; unanticipated
fiscal pressures affecting the government that
may reduce its overall readiness to bail out the
quasi-sovereign sector in a stress scenario; an
increasing likelihood that, for any reason, the
Central Government Agencies 2016 | September 2016
2798
4615
5044
5298
5836
20115
5131
4379
3509
3382
337
-496
-282
-949
-1081
15656
4141
3488
3456
3390
0
0
0
0
0
government could prioritize extraordinary support
(to service debt on time and in full) to other
government-related entities ahead of DAMU; or
the government allowing DAMU's stand-alone
creditworthiness to deteriorate further, which
may indicate reduced government commitment to
the institution.
spglobal.com/ratings
43
Summary Analysis
Delcredere/Ducroire
Rationale
The ratings on Delcredere/Ducroire reflect our
view that there is an almost certain likelihood
that the Belgian federal government will provide
timely and sufficient extraordinary support to
the company in the event of financial distress.
As a result, we equalize the long-term credit
rating on Delcredere/Ducroire with that on
Belgium.
Under our criteria for rating governmentrelated entities (GREs), we base our opinion of
an almost certain likelihood of extraordinary
government support on our assessment of
Delcredere/Ducroire's:
––Integral link with the federal Belgian
government, since it is fully state owned
and federal government members are on its
board. Delcredere/Ducroire benefits from the
status of Federal Institution of Public Interest,
is under the state's direct supervision, and
acts for and at the risk of the state or on its
own account, with the guarantee of the state
granted by law (Law 1939); and
––Critical role for Belgium, given its public policy
role in supporting the country's international
trade and investment policy.
Although the legal framework does not specify
timeliness in the payment of the government
guarantee, we believe the Belgian government
would provide Delcredere/Ducroire with the
necessary resources to allow it to fulfill its
obligations on time. The government has a track
record of financial intervention in the 1980/90s.
We consider Delcredere/Ducroire to have a
critical role for the Belgian federal government
because the country has an open economy,
with exports representing about 85% of GDP.
We believe it fulfils its role as an export credit
agency (ECA), regulated under the arrangement
44
Central Government Agencies 2016 | September 2016
Ratings:
AA/Stable/A-1+
of the Organisation for Economic Cooperation and Development (OECD). As an ECA,
Delcredere/Ducroire provides export insurance
and other financial support when cover for
trade credit and political risks, among others,
are not available in the private market, due, for
example, to duration, country exposure, or large
amounts.
In light of its status as a Federal Institution
of Public Interest (class 'C' public institution),
Delcredere/Ducroire is under the direct
supervision of the Belgian government.
Delcredere/Ducroire is the parent company
and the main company of the Credendo Group
(not rated). The company acts at the risk of
the state with a specific trustee mandate, or
on its own account, with the guarantee of the
state. According to Article 3 of Law 1939, the
Ministry of Finance has to approve all decisions
taken by Delcredere/Ducroire for the account
of the state, and it also has the power to veto
decisions that carry the government guarantee.
In line with EU regulation on competition,
Delcredere/Ducroire's fully owned subsidiary,
Credimundi (formerly SA Ducroire/Delcredere
NV), has assumed Delcredere/Ducroire's
transferable risks (short-term market
activities) since 2005. Credendo Group, of which
Delcredere/Ducroire is the parent company,
also includes several subsidiaries, mostly in
the trade credit sector abroad. The government
guarantee and our ratings do not extend to
Delcredere/Ducroire's subsidiaries.
We view Delcredere/Ducroire's capital and
earnings as extremely strong, supported by
extremely strong capital adequacy under
our risk-based insurance capital model, and
expected satisfactory operating performance.
We do not anticipate capital upstream to the
government. A financial-debt-free balance
sheet and a moderate external growth strategy
Last Ratings Action
And Date
Ratings affirmed on
Oct. 8, 2015
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To support Belgium's
international trade
and investment policy.
It provides export
insurance and other
financial support when
cover for trade credit
and political risks,
among others, are not
available in the private
market.
Issuer Website:
www.
delcredereducroire.be
Primary Credit
Analyst:
Youssef Ait Benasser
Paris
(33) 1-4420-6761
youssef.benasser@
spglobal.com
Secondary Credit
Analyst:
Marie-France Raynaud
Paris
(33) 1-4420-6754
marie-france.
raynaud@
spglobal.com
Ratings At End June
2015:
AA/Stable/A-1+
Ratings At End June
2008:
AA/Stable/A-1+
spglobal.com/ratings
Summary Analysis
Outlook
underpin Delcredere/Ducroire's adequate
financial flexibility.
We consider Delcredere/Ducroire's operating
performance to be adequate, underpinned by
good financial management and a track record
of bottom-line earnings generation.
The stable outlook mirrors that on Belgium.
Because we equalize the long-term ratings on
Delcredere/Ducroire with that on Belgium, any
rating action on Belgium would result in a similar
action on Delcredere/Ducroire.
Delcredere/Ducroire: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
2010
Annual
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Mil.
Gross premiums written
407.2
380.9
411.2
386.7
315.1
334.0
Net premiums written
293.3
250.5
286.0
255.6
236.8
235.5
Period
Currency
Denomination
1. Competetive position:
2. Earning statistics:
8.9
352.6
254.9
180.3
-164.3
119.5
10.8
352.1
255.6
179.3
-163.5
118.9
2862.8
2714.3
2590.5
2398.7
2202.3
2102.2
Total reported investment return
60.6
163.9
163.7
88.2
53.9
64.3
Net investment income
25.5
134.1
137.8
80.3
76.3
56.8
Year to Dec. 2015
2014
2013
2012
2011
2010
Annual
Annual
Annual
Annual
Annual
Annual
Net income before minorities
Net income after minorities
3. Risk position:
Total invested assets
Delcredere/Ducroire: Summary Balance Sheet
Period
€
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Mil.
N.M.
N.M
N.M
N.M
N.M
N.M
855
697
712
696
380
416
3992
3630
3319
3109
2594
2530
Total technical reserves
1389
1053
1079
1049
959
762
Total liabilities
1617
1262
1282
1231
1040
810
Currency
Denomination
Assets (category name - no data)
Equity interests/participations (nonfinancial)
All other assets
Total assets
Liabilities (category name - no data)
Equity (category name - no data)
Total equity
N.M.
N.M
N.M
N.M
N.M
N.M
Total shareholder equity
2376
2368
2037
1878
1554
1720
Note that Delcredere/Ducroire data are based presented in a different format due to its different business nature
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
45
Summary Analysis
Development Bank of Japan Inc.
(DBJ)
Rationale
The ratings on DBJ reflect its status as a
government-related entity with an extremely
high likelihood of receiving extraordinary
government support. Our ratings on DBJ's
government-guaranteed bonds are equalized
with our sovereign ratings on Japan because
the government backs the bonds. Furthermore,
we consider the bank's moderate business
position, strong capital and earnings, moderate
risk position, average funding, and adequate
liquidity. Our assessment of an extremely high
likelihood of extraordinary support stems from
our view that DBJ plays a critical policy role
for the Japanese government in helping the
government implement economic policies, and
that its link with the government is very strong.
DBJ institutes crisis-response measures and
provides long-term funding for infrastructure
and other projects as well as integrated
investment and loan services.
The Japanese government has twice extended
the time frame to fully privatize DBJ, given
that the bank has been providing crisisresponse measures in the wake of the 2008
global financial crisis and the Great East Japan
Earthquake in 2011. The amendments to the
Development Bank of Japan Inc. Act (amended
DBJ Act) removed a specific reference to the
period in which DBJ shall be fully privatized.
The amended act also calls for the clarification
of minimum government ownership of DBJ.
It proposes a 50% or bigger stake until
March 2026 to allow for the completion of
specified investment activities and a bigger
than one-third stake for now to ensure that
crisis-response operations can be carried out
effectively. In our opinion, the amended DBJ Act
indicates that the Japanese government will
likely maintain a strong commitment to DBJ's
operations in the long term.
46
Central Government Agencies 2016 | September 2016
However, to regard DBJ as having an integral
link with the government, which is stronger than
our current assessment and would lead us to
equalize the ratings on DBJ with those on Japan,
we would expect the government to fully own
DBJ in the long term; or we would expect the
government to exercise tighter control over DBJ's
strategy so that we can regard most of DBJ's
operations as an extension of the government.
In our opinion, DBJ's business position is
moderate. DBJ has a strong track record of
lending its investment and financing expertise
to areas such as community development and
revitalization, environmental conservation, and
technological innovation. The bank has also
instituted crisis-response measures, which
are difficult for private financial institutions to
manage.
Compared with major domestic banks, DBJ's
business scale and business diversification
are both limited. Additionally, although the
government has extended the time frame to
fully privatize DBJ on two occasions, there has
been no clear change in the direction of the full
privatization policy. As such, it remains unclear
whether DBJ can sustain the stability of its
operations in the medium to long term, in our
opinion.
We assess DBJ's capital and earnings as strong.
Its capitalization is strong, the quality of its
capital is good, in our view, and profitability
measures are generally on par with those of
other rated Japanese banks.
We believe DBJ's risk position is moderate. Its
securities holdings are limited and interest rate
risk is low because it secures long-term funds
for its long-term financing services. Further,
its exposure is not complicated, reflecting
Ratings:
A/Stable/A-1
Last Ratings Action
And Date
Ratings and outlook
affirmed on Apr. 20,
2016
SACP:
bbb+
LOS:
Extremely high
Role:
Critical
Link:
Very Strong
Key Policy Role:
The bank plays an
important role in
helping the government
implement economic
policies. It institutes
crisis-response
measures and provides
long-term funding for
e.g. infrastructure
progects as well as
integrated investment
and loan services. Also,
DBJ conducts special
investment operations
aimed at revitalizing
regional economies
and reinforcing the
competitiveness of
domestic enterprises.
Issuer Website:
www.dbj.jp
Primary Credit
Analyst:
Miyuki Onchi
Tokyo
(81) 3-4550-8340
miyuki.onchi@
spglobal.com
Secondary Credit
Analyst:
Kensuke Sugihara
Tokyo
(81) 3-4550-8475
kensuke.sugihara@
spglobal.com
Ratings At End June
2015:
A+/Negative/A-1
Ratings At End June
2008:
AA-/Stable/A-1+
spglobal.com/ratings
Summary Analysis
its limited business in trading and investment
banking. However, DBJ's credit concentration
has been increasing in tandem with its growing
crisis-response operations. Hence, DBJ faces a
moderately high risk of credit risk concentration,
in our view. Nevertheless, we believe that DBJ is
unlikely to incur credit costs in the near future,
unless the government significantly changes its
stance of supporting large-lot power company
borrowers.
The amended DBJ Act mandates that DBJ
conduct special investment operations aimed at
revitalizing the regional economy and reinforcing
the competitiveness of domestic enterprises.
Hence, risk management is likely to become
increasingly important because DBJ may
increase assets with relatively high risk, such as
unlisted shares.
We assess DBJ's funding as average and
its liquidity as adequate. The amended DBJ
Act restricts the bank's deposit base to an
extremely limited number of deposit types.
Therefore, we believe its funding structure is
weaker than that of domestic banks, although
the weakness is covered by the majority
of its funding being government loans and
government-guaranteed bonds. We believe
DBJ can maintain adequate liquidity, thanks
to its access to the Bank of Japan's funding
mechanism and steady scheduled repayments
of long-term loans.
Outlook
Our outlook on the ratings on DBJ is stable. We
believe that DBJ continues to have an extremely
high likelihood of receiving extraordinary
government support if needed for the next two
Development Bank of Japan Inc.: Selected Indicators
Period
Currency
Denomination
Tier 1 capital ratio (%)
Year to Mar. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
¥
¥
¥
¥
Bil.
Bil.
Bil.
Bil.
16.3
15.3
15.0
23.0
Leverage ratio (%)
16.0
15.6
15.1
15.3
Total adjusted capital/adjusted assets (%)
16.0
15.6
15.1
15.3
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
0.1
0.2
0.2
0.4
90.3
83.5
94.1
92.6
0.5
0.6
0.3
0.5
Core earnings/operating revenues (%)
55.9
68.5
40.8
54.4
Loan loss reserves/gross nonperforming assets (%)
82.8
82.3
86.0
75.7
Growth in customer loans (%)
-4.2
-0.6
2.0
4.7
-25.0
-23.3
-2.7
-6.3
-0.1
0.7
4.1
5.1
YoY growth in loan loss provisions (%)
N.M.
-1030.0
N.M.
N.M.
Stable funding ratio (%)
93.0
93.2
93.6
91.8
Short-term wholesale funding/total wholesale funding (%)
14.8
13.9
12.7
14.4
100.0
100.0
100.0
100.0
14.8
13.9
12.7
14.4
Growth in loss reserves (%)
Growth in adjusted assets (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
47
Summary Analysis
years or so. However, we believe DBJ's standalone credit profile is under pressure, due to
rising economic risk in Japan's banking sector.
We may raise the ratings on DBJ to the same
level as the sovereign ratings on Japan if DBJ's
link with the government were to become
stronger, which could happen if the probability
of privatization, including partial privatization,
falls. Conversely, we may consider lowering the
ratings on DBJ if its policy role were to become
less important or if its link with the government
weakened. Also, any upgrade or downgrade of
Japan is likely to affect our ratings on DBJ.
Development Bank of Japan Inc.: Summary Balance Sheet
Period
Currency
Denomination
Year to Mar. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
¥
¥
¥
¥
Bil.
Bil.
Bil.
Bil.
658
347
405
418
1942
1770
1525
1201
0
0
0
0
13261
13838
13918
13645
85
113
147
151
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
13177
13725
13771
13494
Earning assets
15543
15695
15693
15089
0
0
0
0
Equity interests/participations (nonfinancial)
279
186
250
232
Total assets
All other assets
16361
16311
16249
15580
Adjusted assets
16187
16197
16085
15444
Liabilities (category name - no data)
Total deposits
Other borrowings
0
0
0
0
13168
13420
13417
12893
Other liabilities
446
263
293
225
Total Liabilities
13613
13683
13710
13119
Total equity
2747
2628
2539
2461
Common shareholders' equity (reported)
2733
2618
2532
2455
102
137
171
200
Preprovision operating income
89
103
89
96
Credit loss provisions (net new)
-28
-31
3
-5
93
124
71
77
0
0
0
0
Equity (category name - no data)
Other items
Nonperforming assets
Net income before extraordinaries
Extraordinary income
48
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Development Bank
of Kazakstan (DBK)
Rationale
We equalize our ratings on DBK with those on
Kazakhstan to reflect our view that there is an
almost certain likelihood that the government
of Kazakhstan would provide timely and
extraordinary support to DBK in a financial stress
scenario. DBK is the largest subsidiary of the
government-owned National Management Holding
Baiterek, and we expect it will remain core to the
Baiterek group's overall strategy, which is broadly
aimed at supporting Kazakhstan's economic
development and diversification.
Our view of the likelihood of timely extraordinary
government support is based on DBK's:
––Integral link with the government of Kazakhstan,
which fully owns and monitors DBK through
Baiterek. DBK was established in 2001 by a
Presidential Decree, and it has special public
status as a national development institution
under the Law On Development Bank of
Kazakhstan; and
––Critical role as the primary institution
mandated to develop Kazakhstan's production
infrastructure and the processing industry. It
generally provides long-term funding to large
capital-intensive investment projects that
have strategic significance for the government
for economic or social reasons. DBK plays a
key role in implementing several government
programs, including the five-year State Program
of Industrial and Innovative Development (SPIID)
2015-2019 and the Nurly-Zhol State Program for
Infrastructure Development.
The bank’s development strategy for 2014-2023
specifies that, among other things, DBK aims to
target investments in non-oil sectors. In our view,
this function has been only partially fulfilled so
far, given that the oil and gas sector amounted to
Central Government Agencies 2016 | September 2016
Ratings:
BBB-/Negative/A-3
over 40% of the bank's gross loan portfolio in 2015.
But we believe this largely reflects the difficulty of
diversifying the Kazakh economy away from oil in a
short period.
Our baseline scenario assumes that DBK's role
for and link with Kazakhstan's government will
remain unchanged over the next few years and
that the government will maintain its commitment
to providing timely support to DBK in the future.
We note that DBK's capital has been increased
on multiple occasions in the past. More recently,
the government promptly injected KZT40 billion
(equivalent to about $120 million or 2% of the
bank’s assets) into DBK in December 2015 to
support its financial standing, following the
depreciation of the local currency.
Our assessment of DBK's stand-alone credit
profile at 'b' reflects our anchor of 'bb-', which is
the starting point for rating a financial institution
operating in Kazakhstan, as well as DBK's
adequate business position, adequate capital and
earnings, moderate risk position, below average
funding, and adequate liquidity.
Our assessment of DBK's business position as
adequate balances the bank's public-policy role as
a specialized development institution with the aim
of financing infrastructure and industrial projects
in the private and public sectors, and its significant
size, against the government-directed nature of
its lending, which impedes its business stability.
DBK is Baiterek's largest subsidiary and accounted
for 60% of Baiterek's consolidated assets at
year-end 2015. We now regard DBK's capital and
earnings as adequate rather than strong, due to
the pronounced weakening of capitalization in
2015 and our expectation that the negative trend
in capitalization will continue in 2016-2017, since
there are no concrete plans for capital increases to
support continued loan growth.
Last Ratings Action
And Date
Ratings and outlook
affirmed on Jun. 30,
2016
SACP:
b
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
DBK is mandated to
develop Kazakhstan’s
production
infrastructure and the
processing industry.
It generally provides
long-term funding
to large and capitalintensive investment
projects which have
strategic significance
for the government
of Kazakhstan for
economic or social
reasons.
Issuer Website:
www.dbk.kz
Primary Credit
Analyst:
Maxim Rybnikov
London
(44) 20-7176 7125
maxim.rybnikov@
spglobal.com
Secondary Credit
Analyst:
Annette Ess, CFA
Frankfurt
(49) 69-33-999-157
annette.ess@
spglobal.com
Ratings At End June
2015:
BBB/Negative/A-2
Ratings At End June
2008:
BBB-/Negative/A-3
spglobal.com/ratings
49
Summary Analysis
As a state development bank, DBK's business
strategy is focused on its policy role instead
of profits. Nevertheless, the bank seeks to
ensure its returns cover its operating and
borrowing costs. DBK's income has been volatile
and its core profitability low over the past six
years, and we expect this will continue. Our
assessment of DBK's risk position as moderate
balances a weaker loss experience than the
Kazakh commercial banks that have not been
restructured, a very high share of loans in foreign
currencies, and high industry concentrations,
with relatively clean asset quality due to
the transfer of nonperforming loans to the
Investment Fund of Kazakhstan, another
Baiterek subsidiary.
from financial institutions constituted about
50% of liabilities at end-2015, predominantly
comprising borrowing from the Export-Import
Bank of China and China Development Bank.
Debt securities are dominated by Eurobonds
(amounting to approximately 30% of liabilities at
end-2015), with major repayments in 2022.
In our opinion, DBK's funding is below average,
reflecting high refinancing risk due to its
concentrated wholesale funding profile. Loans
Outlook
We assess liquidity as adequate, reflecting
adequate holdings of liquid assets and moderate
wholesale debt repayments of $226 million in
2016 and $302 million in 2017, mainly interbank
loans. As the bank's loan leverage is expected to
increase, in line with its strategy, we expect our
liquidity coverage ratio for DBK to weaken but
remain adequate.
The negative outlook on DBK mirrors our outlook
on the sovereign ratings on Kazakhstan. We would
Development Bank of Kazakstan: Selected Indicators
Period
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
Currency
KZT
KZT
KZT
KZT
Denomination
Mil.
Mil.
Mil.
Mil.
0.0
0.0
20.9
0.0
Leverage ratio (%)
Tier 1 capital ratio (%)
17.4
23.7
24.6
20.7
Total adjusted capital/adjusted assets (%)
16.9
23.7
24.6
20.7
Net nonperforming assets/customer loans + other real estate owned (%)
-1.6
-0.3
1.2
20.3
Net interest income/operating revenues (%)
81.2
118.3
97.0
93.2
0.3
0.9
0.2
1.4
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
Growth in loss reserves (%)
Growth in adjusted assets (%)
14.9
50.7
10.5
60.6
309.7
106.7
92.9
64.1
75.0
79.9
-9.1
17.3
-20.2
-31.3
-55.0
3.8
62.9
28.8
-4.9
19.9
YoY growth in loan loss provisions (%)
567.3
-77.5
294.4
-91.8
Stable funding ratio (%)
120.1
126.8
168.2
196.5
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
50
Central Government Agencies 2016 | September 2016
0.3
5.4
0.0
0.9
97.5
97.7
98.9
99.0
0.3
5.3
0.0
0.9
spglobal.com/ratings
Summary Analysis
Development Bank of Kazakstan: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
Currency
KZT
KZT
KZT
KZT
Denomination
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
288147
232054
222772
260503
Securities
179066
195119
352068
390643
83964
61939
0
18248
1432299
818232
454749
500018
32857
41190
59993
133223
Period
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
1399441
777042
394756
366795
Earning assets
1769316
1142754
911322
1086199
Equity interests/participations (nonfinancial)
0
3
3
3
83801
34839
43096
24965
Total assets
2128122
1306686
1014321
1066602
Adjusted assets
2127973
1306537
1014147
1066504
Total deposits
959077
512162
377933
492877
Other borrowings
732144
458234
355927
308574
All other assets
Liabilities (category name - no data)
Other liabilities
80801
23322
28621
17213
Total Liabilities
1772022
993718
762482
819447
356100
312968
251839
247155
Equity (category name - no data)
Total equity
Common shareholders' equity (reported)
Other items
Nonperforming assets
10609
38609
64565
207677
Preprovision operating income
33411
17948
14314
21000
Credit loss provisions (net new)
17403
2608
11582
2937
5703
11262
18989
15265
0
0
0
0
Net income before extraordinaries
Extraordinary income
likely revise the outlook, or raise or lower the
ratings on DBK, if we took similar rating actions on
the sovereign over the next two years.
Additionally, we could lower the ratings if,
contrary to our current expectations, we no longer
assessed the potential for timely extraordinary
government support for DBK and the Baiterek
group as almost certain.
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
51
Summary Analysis
Development Bank of
Southern Africa Ltd. (DBSA)
Rationale
We equalize our ratings on DBSA with those on
South Africa to reflect our view that there is an
almost certain likelihood of the South African
government providing timely and sufficient
extraordinary support to DBSA if needed.
In accordance with our criteria for rating
government-related entities, this view reflects our
assessment of DBSA's:
–– Critical role as the South African government's
primary vehicle for promoting infrastructure
development in the country's municipal and
utilities sectors and in the countries of the
Southern African Development Community
(SADC); and
projects that spur economic growth. Continuing
to successfully perform this role would enhance
DBSA's developmental role and boost efforts to
increase GDP growth in the country.
DBSA also has a mandate to develop the SADC,
focusing on infrastructure financing projects
that link the region's economic corridors. More
recently, DBSA received an extended mandate
enabling it to provide lending and support from
SADC to the rest of Africa. We expect that despite
this expanded mandate, DBSA's growth in the
rest of Africa will be much more gradual than
within South Africa.
DBSA faces a different competitive environment
in lending in the African region. This is because
––Integral link with the South African government, it will compete with other development financial
through 100% ownership and ongoing
institutions that offer lending at concessional
government supervision.
rates, have multiple government ownership,
and also benefit from preferred creditor status
Our assessment of the importance of DBSA's role
as multilateral institutions. DBSA, however, is
to the government as critical is based on our view
guided first by commercial value, as required
that DBSA remains one of the government's key
by the South African government as the sole
vehicles for delivering infrastructure development. shareholder, and then by the benefits of regional
We understand that DBSA's mandate is to focus
integration and partnering with South African
on infrastructure financing and development
entities operating in the region.
in municipalities, public institutions, and other
projects in South Africa.
We continue to assess the strength and
durability of the link between DBSA and
DBSA is making efforts to increase its support to
the government as integral, based on the
South African municipalities and public-sector
government's 100% ownership and ongoing
projects. For under-resourced municipalities,
supervision of DBSA. Over the past few years,
DBSA is providing technical assistance grants,
the government has provided extraordinary
capacity-building initiatives, and overall support
support to DBSA in the form of capital injections
of projects from initiation to final financing of
and callable capital. We understand that the
fully fledged projects. DBSA is looking to extend
government sees the capital injections as
its lending portfolio to the water sector through
a way of strengthening DBSA's contribution
the various water boards to assist in closing
to municipal lending, project-based funding
water infrastructure bottlenecks. In addition, the
to second-tier state-owned enterprises,
government has supported DBSA in extending
and funding of core domestic and regional
lending to municipalities that have infrastructure
infrastructure projects and programs.
52
Central Government Agencies 2016 | September 2016
Ratings:
BBB-/Negative/A-3
Last Ratings Action
And Date
Ratings affirmed and
outlook revised to
negative on Dec. 9,
2015
SACP:
bbLOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
DBSA is the primary
vehicle for promoting
infrastructure
development in the
country's municipal
and utilities sectors
and in the countries
of the Southern
African Development
Community.
Issuer Website:
www.dbsa.org
Primary Credit
Analyst:
Gardner Rusike
Johannesburg
(27) 11-214-4859
gardner.rusike@
spglobal.com
Secondary Credit
Analyst:
Jones T Gondo
Johannesburg
(27) 11-214-4866
jones.gondo@
spglobal.com
Ratings At End June
2015:
BBB-/Stable/A-3
Ratings At End June
2008:
BBB+/Stable/A-2
spglobal.com/ratings
Summary Analysis
We assess DBSA's stand-alone credit profile
(SACP) at 'bb-', considering also the weighted
average economic risk in countries where DBSA
operates and industry risk in South Africa. In our
view, DBSA's business model, although benefitting
from government support, remains concentrated
in terms of business line and absolute size
compared with domestic bank peers. We regard
DBSA's capitalization as very strong, based on
our risk-adjusted capital ratio. Its operational
restructuring has resulted in a lower cost base,
improved risk management and governance, and
a more focused strategic mandate. However,
we believe its franchise position compared with
South African banking sector peers remains
constrained, due to its municipal lending focus
and increased competition from commercial
banks and multilateral development financiers
for a limited pipeline of bankable infrastructure
opportunities.
DBSA's volatile historical loss experience and
significant single-obligor concentrations are
constraints to our SACP assessment. We believe
asset quality problems could materialize,
owing to the structure and repayment schedule
of developmental loans, despite operational
improvements in credit underwriting and
monitoring. DBSA relies on costly wholesale
funds, with no access to contingent liquidity
facilities through South Africa's reserve bank, but
it maintains good liquid balances and a stable
funding profile.
Outlook
The negative outlook reflects that on South Africa,
indicating that the ratings on DBSA will move in
conjunction with those on the sovereign as long as
we assess the likelihood of extraordinary support
as almost certain. We expect this will remain the
case because infrastructure improvements and
Development Bank of Southern Africa: Selected Indicators
Year to March 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
0.0
0.0
0.0
0.0
0.0
Period
Tier 1 capital ratio (%)
Leverage ratio (%)
33.2
31.1
31.0
33.1
37.4
Total adjusted capital/adjusted assets (%)
32.8
30.5
30.2
32.3
36.6
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
0.2
1.3
4.8
4.1
3.2
80.5
90.1
86.4
138.3
122.7
1.8
1.3
-1.2
-0.1
0.7
Core earnings/operating revenues (%)
43.6
35.6
-35.7
-3.8
26.3
Loan loss reserves/gross nonperforming assets (%)
96.5
78.0
53.2
36.6
42.6
Growth in customer loans (%)
13.8
16.7
8.6
6.8
15.0
Growth in loss reserves (%)
25.6
4.0
143.1
5.8
24.2
Growth in adjusted assets (%)
11.2
18.3
3.1
10.4
5.2
1.2
-54.2
224.7
116.2
0.1
102.1
105.5
98.5
103.7
100.3
10.3
8.2
11.9
9.6
12.2
100.0
100.0
100.0
100.0
100.0
10.3
8.2
11.9
9.6
12.2
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
53
Summary Analysis
development of the municipal sector will likely
remain government priorities, underpinning our
view of DBSA's critical role for South Africa's public
policy and its integral link with the government.
We could consider a negative rating action if
we observed a stronger extension of DBSA's
activities in countries outside South Africa or
to the private sector than we currently expect,
without clear developmental objectives. This
could lead us to conclude that the importance of
DBSA's role for the South African government had
diminished. Upside rating potential for DBSA is
limited by our long-term rating on South Africa,
because we do not expect to rate DBSA higher
than the sovereign.
Development Bank of Southern Africa: Summary Balance Sheet
Year to March 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Period
Assets (category name - no data)
Cash and money market instruments
3902
4136
1252
2823
1398
Securities
3300
2934
3436
2868
2795
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
0
0
0
0
0
59675
52457
44965
41391
38767
2929
2374
2337
961
909
Customer loans (net)
56746
50084
42629
40430
37858
Earning assets
66081
58958
48401
44968
41780
5092
4610
4456
4013
3478
60
63
65
65
68
Total assets
70944
63826
53965
52337
47397
Adjusted assets
70867
63743
53879
52247
47320
0
0
0
0
0
Equity interests/participations (nonfinancial)
All other assets
Liabilities (category name - no data)
Total deposits
Other borrowings
45919
42823
35872
33514
28297
Other liabilities
1220
1046
1186
1296
1029
Total Liabilities
47261
43925
37260
34810
29546
Equity (category name - no data)
Total equity
23683
19901
16706
17528
17851
Common shareholders' equity (reported)
23683
19901
16706
17528
17851
Nonperforming assets
3034
3044
4390
2628
2131
Preprovision operating income
2002
1560
934
448
580
Other items
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
54
Central Government Agencies 2016 | September 2016
743
735
1606
495
229
1214
787
-826
-371
29
0
8
4
47
36
spglobal.com/ratings
Summary Analysis
Development Bank
of the Philippines (DBP)
Rationale
The ratings on DBP are equalized with the
sovereign credit ratings on the Philippines. DBP
plays a critical public policy role in supporting
the economic and social development of the
Philippines and has an integral link to the
government. Therefore, we see an almost certain
likelihood that the government will provide timely
and sufficient extraordinary support to DBP in the
event of financial distress.
Our assessment of government support reflects
the history of capital support and sovereign
guarantees by the government for DBP's external
borrowing. The government wholly owns the bank,
and the president of the country appoints its
board of directors. DBP's designated mandate
is broadly defined as development financing.
In supporting the government's social and
economic development agenda, DBP undertakes
a wide range of projects that cannot be pursued
on a commercial basis. DBP is one of only two
government-owned development financing
agencies and one of the largest institutions in the
Philippine banking system.
DBP is the seventh-largest bank in the
Philippines in terms of assets, with a mandate
to assist critical industries and sectors. The
bank's status as a leading development banking
institution and long operating track record
support its business profile. DBP's profitability
has been stable over economic cycles, although
somewhat weaker than commercial banks', partly
reflecting its policy lending focus. DBP does
not have meaningful exposure to higher-yield
consumer lending by virtue of its development
mandate. The bulk of the bank's income is from
stable lending and related fees. DBP's capital
position is adequate, in our view.
Central Government Agencies 2016 | September 2016
Ratings:
BBB/Stable/A-2
We expect DBP's capital and earnings to remain
adequate over the next 18-24 months. Our
forecast is based on our assumption that DBP's
loans will grow 10%-12% per annum and that the
bank will sustain its profitability at the current
level. We believe gradually rising interest rates
will protect DBP's net interest margin from
deteriorating significantly. We anticipate that
the bank's profit generation and retention will
broadly keep pace with growth. We expect DBP
to maintain a reasonable dividend payout and
capital buffers that are above the regulatory
minimum.
DBP's straightforward business model and
manageable growth appetite support its risk
position. We believe the bank will continue to
focus on traditional core lending and deposittaking business. We also believe DBP will pursue
loan growth in line with the industry average.
However, the bank has somewhat higher portfolio
concentration in large manufacturing loans
and single-name concentration, reflecting its
development financing role. DBP's top 20 loan
exposure accounts for about 24% of its total. The
bank's diversification in consumer lending is also
limited.
In our opinion, the bank's ability to mobilize
retail deposits is hampered by its smaller branch
network compared with other large banks'
and more limited retail presence. That said,
the bank has good access to fixed-rate official
development assistance funding, which is
attractive given rising interest rates. We expect
DBP's liquid asset portfolio to be sufficient to
cover its short-term wholesale borrowings.
Last Ratings Action
And Date
Ratings and outlook
affirmed on May 26,
2016
SACP:
bbLOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To support the
economic and social
development of the
Philippines.
Issuer Website:
www.devbnkphl.com
Primary Credit
Analyst:
Nikita Anand
Singapore
(65) 62161050
nikita.anand@
spglobal.com
Secondary Credit
Analyst:
Ivan Tan
Singapore
(65) 6239-6335
ivan.tan@
spglobal.com
Ratings At End June
2015:
BBB/Stable/A-2
Ratings At End June
2008:
BB-/Stable/B
We believe that the completion of the proposed
merger between Land Bank of the Philippines
and DBP would likely face delays, with the
scheduled change in presidency and leadership
spglobal.com/ratings
55
Summary Analysis
administration in June 2016 Meanwhile, we
expect DBP to continue pursuing its policy lending
role in accordance with its forming charter. The
bank's status as a leading development banking
institution and long operating track record support
its business profile.
Outlook
The stable outlook on DBP reflects the outlook
on the Philippines. We expect DBP to remain an
important instrument for the government in its
medium-term development strategy. We also
believe that the bank will sustain its public policy
role over the next two years. The rating on DBP
will move in tandem with the sovereign rating.
Any significant change in government policy that
affects DBP's critical role or integral link would
also affect the rating.
Development Bank of the Philippines: Selected Indicators
Period
Currency
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
PHP
PHP
PHP
PHP
PHP
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
10.2
13.8
17.1
15.3
0.0
Leverage ratio (%)
6.9
7.1
7.8
9.3
10.2
Total adjusted capital/adjusted assets (%)
6.9
8.5
9.4
11.2
12.1
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
1.0
0.2
0.3
0.6
0.5
73.7
87.3
68.0
76.0
67.2
0.9
1.0
1.2
1.2
1.2
Core earnings/operating revenues (%)
34.6
38.8
43.9
42.9
36.1
Loan loss reserves/gross nonperforming assets (%)
76.5
95.6
91.6
85.4
88.4
Growth in customer loans (%)
9.6
13.2
4.2
-2.9
14.8
Growth in loss reserves (%)
3.0
4.0
9.1
-2.4
14.8
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
8.1
9.3
21.4
3.5
14.3
-26.3
-24.9
200.8
-81.0
-33.2
N/A
169.6
172.7
141.7
128.3
Short-term wholesale funding/total wholesale funding (%)
58.8
51.2
59.6
54.9
40.0
Total wholesale funding / funding base (%)
28.8
29.6
35.6
44.0
46.8
Short-term wholesale funding/funding base (%)
16.9
15.2
21.2
24.1
18.7
56
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Development Bank of the Philippines: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
PHP
PHP
PHP
PHP
PHP
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
137340
130835
117684
100408
68693
Securities
156517
138652
136940
80122
99903
Period
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
4073
12132
2274
7
2237
205410
187497
165587
158945
163695
6425
6238
5997
5496
5632
Customer loans (net)
198985
181259
159590
153449
158063
Earning assets
409792
362034
310939
259315
290451
Equity interests/participations (nonfinancial)
0
0
0
0
0
5546
8510
7368
6624
6491
Total assets
505349
468002
428174
352721
340868
Adjusted assets
505349
467341
427528
352173
340277
324299
293684
251288
177062
158569
Other borrowings
81122
78620
85213
87965
96990
Other liabilities
11930
17144
7559
6033
13268
Total Liabilities
467532
425282
387475
310350
299082
Total equity
37817
42720
40699
42371
41785
Common shareholders' equity (reported)
37817
36196
34174
35847
35261
All other assets
Liabilities (category name - no data)
Total deposits
Equity (category name - no data)
Other items
Nonperforming assets
8396
6525
6546
6437
6369
Preprovision operating income
6341
5964
6343
4952
5643
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
Central Government Agencies 2016 | September 2016
266
361
481
160
840
4722
4549
5180
4169
4001
0
0
0
0
0
spglobal.com/ratings
57
Summary Analysis
The Export-Import Bank of China
(China EXIM)
Rationale
The rating on the China EXIM reflects our view
that there is an almost certain likelihood that the
Chinese government would provide timely and
sufficient extraordinary support to China EXIM
in the event of the bank being under financial
distress. We have therefore equalized the issuer
credit rating on China EXIM with the sovereign
credit rating on China.
In accordance with our criteria for governmentrelated entities, our rating approach is based
on our view of the following China EXIM
characteristics:
––Integral link with the Chinese government,
through 100% ownership and ongoing
government intervention. The government drives
China EXIM's business strategy, determines its
growth target, appoints its senior management,
and approves its budget; and
––Critical role because of the bank's policy role
in promoting high-value-added foreign trade
flows, deepening China's economic cooperation
with other economies, and facilitating Chinese
companies' overseas expansion. China EXIM's
original focus was on providing trade credit to
promote the country's exports.
In recent years, the bank has been transforming
into a full-fledged international cooperation
bank. It has been increasing loans to foreign
and domestic entities to further China's foreign
and natural resources policies and to facilitate
imports. The bank received a US$45 billion capital
injection from the People's Bank of China in
mid-2015. The capital infusion aimed to enhance
the bank's lending capacity and highlights its
instrumental role in facilitating China's economic
rebalancing.
58
Central Government Agencies 2016 | September 2016
The China Banking Regulatory Commission
(CBRC) applies a zero-risk weighting to bank
holdings of bonds issued by China EXIM and
other policy financial institutions. This is in
contrast to CBRC's regulatory treatment of
financial bonds issued by commercial banks.
China EXIM receives ongoing interest support
from the Ministry of Finance for policy loans
extended at below the cost of funding. The
ministry may also provide general support if the
bank reports financial losses. Since the bank
has remained profitable since 2008, it has not
received such general support in recent years.
We believe China EXIM's stand-alone credit
profile has improved substantially following the
capital infusion, while we continue to assess it to
be in a speculative-grade category (rated below
'BBB-'). In our view, China EXIM's strong credit
growth and weak profitability could significantly
weigh on its capitalization, partly offsetting the
benefits from a one-time capital boost in the
next two to three years. While the bank is not
subject to the capital adequacy requirements
applicable to commercial banks, we understand
Chinese policymakers are contemplating a
capital regulation framework for policy banks.
Unlike commercial banks, China EXIM's sizeable
concessional lending book keeps its profitability
persistently below the average for China's
banking sector and has led to inadequate
internal capital accruals for credit growth.
We assess China EXIM's risk position as
moderate, in view of the bank's strong credit
growth and less sophisticated risk management.
Ratings:
AA-/Negative/A-1+
Last Ratings Action
And Date
Ratings affirmed and
outlook revised to
negative on Apr. 1,
2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To promote high-value
added foreign trade
flows, deepen China's
economic cooperation
with other economies,
and facilitate Chinese
companies' overseas
expansion.
Issuer Website:
www.eximbank.gov.cn
Primary Credit
Analyst:
Harry Hu, CFA
Hong Kong
(852) 2533-3571
harry.hu@
spglobal.com
Secondary Credit
Analyst:
Qiang Liao, PhD
Beijing
(86) 10-6569-2915
qiang.liao@
spglobal.com
Ratings At End June
2015:
AA-/Stable/A-1+
Ratings At End June
2008:
A/Positive/A-1
spglobal.com/ratings
Summary Analysis
Outlook
The negative outlook on China EXIM reflects the
outlook on the sovereign rating on China. Given
the bank's integral link and critical role to the
central government, future rating transitions are
linked to the sovereign, and we would lower the
rating if we lower the sovereign credit rating on
China. Having said this, we could also lower the
rating if the sovereign's willingness to support the
bank declines. However, we assess this scenario
as very unlikely in the coming years. We may revise
the outlook to stable if we revise the outlook on
the sovereign credit rating on China to stable.
Ex-Im Bank of China: Selected Indicators
Period
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
CNY
CNY
CNY
CNY
CNY
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
10.9
1.2
1.3
1.3
1.3
Total adjusted capital/adjusted assets (%)
10.9
1.2
1.3
1.3
1.3
Net nonperforming assets/customer loans + other real estate owned (%)
N/A
N/A
N/A
N/A
N/A
24.4
64.5
68.5
65.9
98.0
Core earnings/ Adjusted assets (%)
Net interest income/operating revenues (%)
0.1
0.1
0.2
0.2
0.2
Core earnings/operating revenues (%)
8.2
12.3
19.4
17.4
27.5
Loan loss reserves/gross nonperforming assets (%)
N/A
N/A
N/A
N/A
N/A
Growth in customer loans (%)
17.8
20.0
22.6
29.4
29.2
Growth in loss reserves (%)
N.M.
N.M.
N.M.
N.M.
N.M.
Growth in adjusted assets (%)
19.7
25.6
20.9
30.0
35.2
168.3
48.1
-13.2
234.0
131.5
80.3
67.4
67.2
N/A
N/A
Short-term wholesale funding/total wholesale funding (%)
42.6
48.2
45.3
44.8
45.0
Total wholesale funding / funding base (%)
96.7
96.7
96.6
95.4
95.0
Short-term wholesale funding/funding base (%)
41.2
46.6
43.8
42.8
42.8
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
59
Summary Analysis
Ex-Im Bank of China: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
CNY
CNY
CNY
CNY
CNY
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
573904
475621
316876
264559
204242
Securities
163029
116420
75312
76989
45215
0
0
0
0
0
2052497
1741727
1450943
1183032
914301
0
0
0
0
0
Period
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
2052497
1741727
1450943
1183032
914301
Earning assets
2587257
2321774
1823772
1517105
1154606
Equity interests/participations (nonfinancial)
0
0
0
0
0
16196
7456
4997
3414
1483
Total assets
2833473
2367765
1884867
1558933
1199057
Adjusted assets
2833259
2367541
1884630
1558899
1199026
462752
610810
406481
336247
264330
2023614
1701562
1425170
1175352
892078
All other assets
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
33380
27121
24232
25774
23042
Total Liabilities
2524005
2339493
1861031
1538864
1182924
Total equity
309468
28272
23836
20069
16133
Common shareholders' equity (reported)
309346
28224
23836
20038
16119
Equity (category name - no data)
Other items
0
18134
10012
9035
6825
Preprovision operating income
45806
20596
17555
18061
9160
Credit loss provisions (net new)
36657
13662
9225
10630
3183
5130
4038
4262
3776
3124
0
0
0
0
0
Nonperforming assets
Net income before extraordinaries
Extraordinary income
60
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Export-Import Bank of India
(India Exim)
Rationale
The rating on India Exim is at the same level
as the long-term sovereign credit rating on
India. That's because we see an almost certain
likelihood that the Indian government would
provide timely and sufficient extraordinary
support to India Exim in the event of financial
distress. We assess India Exim as having sound
capitalization and earnings, and high credit costs
due to increasing stressed assets.
India Exim plays a critical role and is integrally
linked to the government, in our view. We see
an almost certain likelihood of extraordinary
government support to the entity, if needed.
Therefore, in accordance with our criteria
for rating government-related entities, we
equalize the rating on India Exim with that on
India. We believe India Exim plays a crucial role
in implementing India's foreign trade policy.
The entity's operations are mostly in export
credit and finance to support the globalization
efforts of Indian companies. It also provides
information and advisory services to these
companies. In our view, India Exim is integrally
linked to the sovereign through the government's
sole ownership of India Exim. The government
maintains control over the bank's management
by appointing its chairman and most of the board
of directors.
In our view, ongoing support for India Exim,
mainly through regular capital infusions, interest
equalization, and loan guarantees reflects the
government's commitment to expanding the
entity's scale and scope of operations. The
government injected Indian rupee (INR) 13 billion
in India Exim in fiscal year ended March 31, 2015,
increasing its paid-up capital to INR50.6 billion.
The union budget for fiscal 2016 has allocated
INR13 billion for capital infusion into India Exim.
Central Government Agencies 2016 | September 2016
Ratings:
BBB-/Stable/A-3
In our view, the uniqueness of India Exim's
business model reduces the entity's exposure to
competition, including government guarantees,
interest equalization support on some lines of
credit to overseas borrowers, and the ability to
provide refinance export credit to commercial
banks. India Exim is also one of the few noncommercial-bank entities in India that can also
borrow from the central bank. However, India
Exim's sizeable reliance on foreign sources of
funds, given its foreign currency needs, balances
these factors.
India Exim's satisfactory business stability and
management, and moderate diversification
underpin its business position. India Exim has a
1.2% share of banking sector loans and plays a
crucial role in implementing India's foreign trade
policy. Given its objectives, India Exim's business
is moderately diversified, with a focus on export
credit and finance to support Indian companies'
globalization efforts.
Despite its public-policy role, India Exim can
continue to operate on a commercial basis with
a fair degree of autonomy, in our view. India
Exim's revenue is stable, with limited marketsensitive income. Interest income and fee income
accounted for 92% of the net revenue in the past
five years.
India Exim's capital comprises only core equity,
and the entity benefits from regular capital
infusions from the government. We expect India
Exim to expand by an average 13% a year over the
next few years. We expect the entity's profitability
to moderate as credit costs remain high and the
proportion of foreign currency loans, including
lines of credit, in total loans increases. We
anticipate that ongoing capital infusions from the
government will help India Exim's capitalization.
Last Ratings Action
And Date
Ratings and outlook
affirmed on July 26,
2016
SACP:
bb
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To implement India's
foreign trade policy. Its
operations are mostly
in export credit and
finance to support the
globalization efforts
of Indian companies.
It also provides
information and
advisory services to
these companies.
Issuer Website:
www.eximbankindia.in
Primary Credit
Analyst:
Nikita Anand
Singapore
(65) 62161050
nikita.anand@
spglobal.com
Secondary Credit
Analyst:
Amit Pandey
Singapore
(65) 6239-6335
amit.pandey@
spglobal.com
Ratings At End June
2015:
BBB-/Stable/A-3
Ratings At End June
2008:
BBB-/Stable/A-3
spglobal.com/ratings
61
Summary Analysis
Our assessment of India Exim's risk position
reflects the entity's elevated credit costs due
to stress in loans to highly leveraged small
and midsize companies that have been hit by a
sluggish domestic economy and high interest
rates. India Exim's ratio of gross nonperforming
loans (NPLs) is lower than India's banking
industry average. India Exim also holds security
receipts, which represent 2.5% of its loans. A
security receipt is the consideration that assetreconstruction companies pay India Exim to
take over their NPLs. We continue to view these
securities as stressed assets because India Exim
retains the risks on these exposures.
India Exim's highest loan exposure is to sectors
that we view as high risk: ferrous metals (7.6%);
engineering, procurement, and construction
(10.1%); and textiles and garments (6.1%).
Government guarantees on some loans mitigate
this risk to an extent.
India Exim will likely continue to have access to
domestic and international debt markets for its
funding needs, given its government linkages. Its
funding for fiscal 2015 comprised domestic bonds
(45%), foreign currency borrowings (45%), and
commercial paper and others (10%).
India Exim's liquidity position is adequate, in our
view. To manage liquidity, the entity ensures that
cash inflows match outflows, and it keeps liquid
assets (cash, bank balances, and government
securities form about 7% of its assets).
Outlook
The stable outlook on India Exim reflects the
outlook on the sovereign credit rating on India.
The outlook also reflects our expectation that
India Exim's role for and link to the government
will remain unchanged over the next few years.
The ratings and outlook on India Exim will move in
tandem with the sovereign rating.
Ex-Im Bank of India: Selected Indicators
Period
Currency
Year to March 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
INR
INR
INR
INR
INR
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
13.8
12.8
13.7
14.6
15.1
Leverage ratio (%)
10.1
9.5
9.5
9.4
9.5
Total adjusted capital/adjusted assets (%)
10.1
9.5
9.5
9.4
10.6
2.7
3.3
4.6
1.8
0.7
79.3
83.7
80.0
78.3
81.1
0.7
0.8
1.0
1.1
1.1
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
31.8
27.2
39.8
41.8
47.6
Loan loss reserves/gross nonperforming assets (%)
46.9
34.1
28.8
39.8
54.4
Growth in customer loans (%)
14.6
15.7
20.2
18.4
16.9
Growth in loss reserves (%)
60.7
5.1
89.0
66.3
14.9
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
12.9
14.5
19.5
16.3
13.7
-32.4
125.9
28.2
88.9
1076.7
Stable funding ratio (%)
69.6
75.6
N/A
N/A
N/A
Short-term wholesale funding/total wholesale funding (%)
33.0
28.1
24.2
21.2
20.0
Total wholesale funding / funding base (%)
97.4
96.7
95.2
94.2
94.3
Short-term wholesale funding/funding base (%)
32.1
27.1
23.1
20.0
18.9
62
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Ex-Im Bank of India: Summary Balance Sheet
Period
Year to March 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
INR
INR
INR
INR
INR
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Assets (category name - no data)
Cash and money market instruments
45651
51740
69338
38735
33753
Securities
49820
39163
24982
32117
28256
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
0
0
0
0
0
869539
758709
655639
545309
460417
20430
12717
12100
6402
3850
Customer loans (net)
849108
745992
643538
538906
456567
Earning assets
965004
849610
749957
616160
522424
Equity interests/participations (nonfinancial)
0
0
0
0
0
19392
17827
11480
19441
24478
Total assets
984957
872148
761793
637295
548029
Adjusted assets
984957
872148
761793
637295
548029
20146
23728
30834
31566
32410
All other assets
Liabilities (category name - no data)
Total deposits
767088
691221
614142
515108
434046
Other liabilities
Other borrowings
98697
74102
44428
30618
23682
Total Liabilities
885930
789051
689403
577292
490138
Total equity
99026
83097
72390
60003
57892
Common shareholders' equity (reported)
99026
83097
72390
60003
52302
Equity (category name - no data)
Other items
Nonperforming assets
43600
37310
41983
16087
7080
Preprovision operating income
20741
24002
17040
14925
11217
Credit loss provisions (net new)
9389
13897
6151
4800
2541
Net income before extraordinaries
7259
7098
7423
6751
5836
32
31
31
30
19
Extraordinary income
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
63
Summary Analysis
Export-Import Bank of Korea
(KEXIM)
Rationale
The ratings on Export-Import Bank of Korea
(KEXIM) reflect the bank's critical public
policy role as Korea's legally mandated export
credit agency and its integral link with the
government, its direct and indirect sole owner.
We equalize the ratings on KEXIM with those
on Korea, reflecting our opinion that there is
an almost certain likelihood that the Korean
government will provide timely and sufficient
extraordinary support to KEXIM in the event of
financial distress.
KEXIM is Korea's official export credit agency.
It is mandated to facilitate Korean companies'
exports, imports, and overseas investments,
and development of overseas natural resources
through the provision of financing facilities, such
as loans and guarantees, on behalf of the Korean
government. KEXIM's ability to secure longterm foreign currency financing backed by the
government support makes it one of the primary
financial institutions to provide long-term funds
for export and import activities. KEXIM was
also a source of much-needed foreign currency
liquidity when external financing dried up during
periods of stress, such as the 1997-1998 Asian
financial crisis and 2008-2009 global financial
turmoil. In our view, these roles are critical to
the Korean government. The government also
recognizes KEXIM's importance for the execution
of economic policy.
The Korean government, the Bank of Korea, and
Korea Development Bank own stakes in KEXIM
worth 73.9%, 13.1%, and 13.0%, respectively,
as of March 31, 2016. In addition to the
government's direct and indirect ownership of
KEXIM, it has a legal obligation to maintain the
bank's solvency. S&P Global Ratings views this
statutory obligation as a sign of the government's
very strong commitment to support KEXIM,
64
Central Government Agencies 2016 | September 2016
rather than a guarantee of timely payment of all
of the bank's obligations. These commitments
make the link between the government and
KEXIM integral, in our view.
In our view, KEXIM enjoys good business stability
as the nation's export credit agency, despite
relatively weak profitability. As an export
credit agency supporting long-term and large
overseas projects regardless of economic and
market situation, KEXIM's revenue stream is
stable. KEXIM has a strong market position in
trade finance. Because of KEXIM's policy role,
bottom-line profitability is not a key objective,
and KEXIM has never posted net losses through
an economic cycle. As such, profitability does
not constrain our assessment of the company's
business stability.
We expect KEXIM's risk-adjusted capital ratio
to be in the range of 5%-7% over the next 12 to
18 months. The government's ongoing capital
injections and stable asset growth will likely
support KEXIM's capitalization, despite its
relatively weaker profitability, which stems
partly from its policy role. KEXIM's financial
soundness is very important to the government
because it acts as a foreign-currency liquidity
provider to the financial market when the private
sector faces difficulties raising foreign-currency
funding. The government has been injecting
capital and amended the KEXIM Act to increase
the limit of paid-in capital to Korean won (KRW)
15 trillion from KRW8 trillion in January 2014.
Ratings:
AA/Stable/A-1+
Last Ratings Action
And Date
Ratings raised on
Aug. 8, 2016
SACP:
bb
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
It operates as Korea's
legally mandated
export credit agency.
Issuer Website:
www.koreaexim.go.kr
Primary Credit
Analyst:
HongTaik Chung, CFA
Hong Kong
(852) 2533 3597
hongtaik.chung@
spglobal.com
Secondary Credit
Analyst:
Daehyun Kim
Hong Kong
(852) 2533-3508
daehyun.kim@
spglobal.com
Ratings At End June
2015:
A+/Positive/A-1
Ratings At End June
2008:
A/Stable/A-1
KEXIM's high asset concentrations in some
sectors and regarding single obligors vulnerable
to economic downturn constrain our risk position
assessment for the company at weak. To support
larger overseas projects, the government
amended the KEXIM Act to increase credit
limits for a single obligor and group exposures.
spglobal.com/ratings
Summary Analysis
This has led to increasing concentration risks to
some extent, in our view. We also believe that the
company's underwriting standards and overall
risk management have deteriorated, given its
increasing exposure to weak corporate sectors
such as shipping and shipbuilding in the past
several years. We think some large shipbuilding
and shipping corporates continue to struggle
financially, battling against overcapacity and
competition, and this could further sharply erode
KEXIM's asset quality measures and increase
credit costs for the coming few years.
We believe KEXIM will maintain adequate
funding and liquidity profiles over the next 12
to 18 months, reflecting its adequate cash flow
management and ongoing support from the
government, which affords it strong access to
multiple funding sources including both domestic
and international capital markets. In addition,
KEXIM has access to the government's foreign
currency reserves, enabling it to manage the
currencies of its assets and liabilities. The
company is not exposed to significant maturity
concentrations and is strongly positioned to
manage its refinancing requirements, backed by
ongoing government support.
Outlook
The outlook on the long-term foreign currency
rating on KEXIM is stable over the next 18-24
months. This reflects our outlook on the long-term
foreign currency rating on Korea. We equalize
the ratings on KEXIM with those on the sovereign
ratings on Korea because we expect the bank
to remain a government-related entity with an
almost certain likelihood of receiving government
support. So far, the government has shown no
intention of privatizing KEXIM. The stable outlook
on the sovereign ratings reflects our expectation
that Korea's credit metrics will remain broadly
unchanged over the next two years. The ratings
on KEXIM will move in tandem with the sovereign
ratings.
Export-Import Bank of Korea: Selected Indicators
Period
Currency
Denomination
Tier 1 capital ratio (%)
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
KRW
KRW
KRW
KRW
Mil.
Mil.
Mil.
Mil.
8.9
9.3
10.4
10.3
Leverage ratio (%)
13.4
13.3
15.1
16.7
Total adjusted capital/adjusted assets (%)
13.3
13.3
15.0
16.4
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
2.5
0.5
-2.0
-3.2
53.0
43.0
42.6
32.3
Core earnings/ Adjusted assets (%)
0.1
0.1
0.1
0.7
Core earnings/operating revenues (%)
3.6
9.5
9.1
37.4
59.0
85.2
174.1
361.6
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
9.3
17.6
12.3
N.M.
32.1
-23.7
19.4
N.M.
Growth in adjusted assets (%)
12.1
19.9
11.7
N.M.
YoY growth in loan loss provisions (%)
62.8
4.3
63.6
N.M.
Stable funding ratio (%)
69.0
63.2
67.8
70.9
Short-term wholesale funding/total wholesale funding (%)
33.8
36.1
33.5
30.4
100.0
100.0
100.0
100.0
33.8
36.1
33.5
30.4
Growth in loss reserves (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
65
Summary Analysis
Export-Import Bank of Korea: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
KRW
KRW
KRW
KRW
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
4982530
3207612
2281520
1968966
Securities
7415329
6249211
5086157
4368583
369679
165000
165000
150000
68909431
63032662
53608588
47725270
2417662
1830308
2397914
2008126
Period
Currency
Denomination
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
66491769
61202354
51210674
45717144
Earning assets
81676969
72654485
61141265
54212819
Equity interests/participations (nonfinancial)
610698
559698
505720
499025
All other assets
754346
751805
549919
442701
Total assets
82507731
73600155
61403793
54961453
Adjusted assets
82478808
73581608
61385944
54945535
0
0
0
0
66477239
58113782
48771145
43523064
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
4869482
5401272
3281059
2296552
Total Liabilities
71420164
63696309
52154224
45883545
Total equity
11087567
9903846
9249569
9077908
Common shareholders' equity (reported)
11083828
9900392
9246677
9074556
Equity (category name - no data)
Other items
Nonperforming assets
4100000
2149000
1377000
555276
Preprovision operating income
1133298
779577
730761
892940
Credit loss provisions (net new)
1064489
653824
626799
383044
40609
84807
76172
390550
0
0
0
0
Net income before extraordinaries
Extraordinary income
66
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Export-Import Bank of the
Slovak Republic (Eximbanka)
Ratings:
A+/Stable/A-1
Rationale
Under the abovementioned legislation, the state
has issued a statutory guarantee that makes
the government unconditionally and irrevocably
liable for all of Eximbanka's commitments except
for marketable risk insurance. The agency's
total exposure to the latter activities has almost
halved over the past four years. Eximbanka's
aggregate insurance exposure amounts to €550
million, which represents more than a 30%
drop compared with 2012, when the exposure
represented about €800 million. During the same
timeframe, nonmarketable risk insurance exposure
remained roughly constant and stood at €355
In accordance with our criteria for rating GREs, our million for 2015, while marketable risks contracted
rating approach for Eximbanka is based on our view to €195 million in 2015 from €425 million in 2012.
of the agency's:
Net premiums earned from insurance activities
represented about 40% of Eximbanka's net
––Critical role as a key tool supporting the
revenues. The agency's banking activity exposure
government's export strategies and projects.
has grown by about 20% since 2012, standing at
Given Slovakia's openness and trade dependence, €372 million in 2015, on both loans and guarantees
exports are crucial to its economic development;
increasing.
and
The state guarantee does not specifically mention
––Integral link with the Slovak government.
Eximbanka's debt obligations, nor does it address
Eximbanka is 100% state owned and embedded
timeliness of public support. Nevertheless, we
in a comprehensive framework of supervision by
equalize our ratings on Eximbanka with those on
the sovereign. In addition, the state has issued
the sovereign because we believe that the Slovak
a guarantee for the majority of the agency's
government would provide extraordinary support
commitments.
to Eximbanka if needed.
We equalize our ratings on Eximbanka with those
of on its sole owner, the Slovak Republic. This is
because we regard Eximbanka as a governmentrelated entity (GRE) and consider that there is an
almost certain likelihood of government support
for the entity. In our view, the government has the
capability and willingness to provide timely and
sufficient extraordinary support to Eximbanka in
the case of a financial stress scenario in which
the agency's debt-servicing capacity would be
potentially jeopardized.
Eximbanka was established in 1997 as the
Export-Import Bank of the Slovak Republic. The
agency provides support to exporters through
both export-related banking (direct credit,
refinancing, investment loans, and guarantees)
and (re-)insurance activities. In addition to its
export-related operations, Eximbanka also
issues guarantees and credits for importers with
the overall aim of supporting the government's
strategy of promoting trade and employment.
Central Government Agencies 2016 | September 2016
The Slovak government wholly owns Eximbanka
through the ministry of finance. Accordingly, the
ministry directly and indirectly supervises the
entity. Most importantly, the ministry directly
approves Eximbanka's financial statements and
annual reports. The ministry can appoint and recall
the supervisory board of Eximbanka, which is in
charge of monitoring and auditing the agency's
financial operations. Specifically, the supervisory
board must approve Eximbanka's domestic and
foreign capital raising, and its credit terms and
conditions. In addition to the ministry, the board
Last Ratings Action
And Date
Ratings and outlook
affirmed on Aug. 3,
2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To support the Slovak
Republic government's
export strategy, which
is key to the nation's
economic development
given its openness and
trade dependence.
Issuer Website:
www.eximbanka.sk
Primary Credit
Analyst:
Sabine Daehn
Frankfurt
(49) 69-33-999-244
sabine.daehn@
spglobal.com
Secondary Credit
Analyst:
Niklas Steinert
Frankfurt
(49) 69 33 999 248
niklas.steinert@
spglobal.com
Ratings At End June
2015:
A/Positive/A-1
Ratings At End June
2008:
N/A
spglobal.com/ratings
67
Summary Analysis
also must approve the agency's annual report and
budget. Our assessment of the agency's link to the
government also factors in the latter's track record
of injecting funds into Eximbanka: €60 million in
2012, €41 million in 2009, and €17 million in 2000.
The government provided these additional funds
to ensure that Eximbanka's capitalization was
sufficient to support its operations.
or export-related activities. For importers,
Eximbanka mainly grants investment credits
aimed at providing funds for the modernization
of technology and infrastructure for traderelated business operations. Additionally, the
agency complements the commercial export
insurance market by primarily focusing on insuring
nonmarketable risks.
We consider the agency's public mandate as
critical for the government. Eximbanka is the
official export-financing agency of the Slovak
Republic. As a small and open economy, the
promotion of exports and trade is a key element in
managing the country's economic development,
both for economic growth and employment. In
banking, Eximbanka focuses on providing direct
loans or refinancing of existing loans and issuing
guarantees to clients to promote exporters
Eximbanka's total business volume decreased in
2015, amid the low-interest-rate environment and
an increasingly strong commercial sector. The only
business segment showing positive growth in the
past year was nonmarketable export insurance
risk. We view this development as evidence of
Eximbanka's critical role for the Slovak export
sector's business operations, for which the market
does not provide financing and insurance solutions
and where Eximbanka has a part to play.
Export Import Bank of the Slovak Republic: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
81.2
68.7
69.5
87.9
76.2
Period
Currency
Total adjusted capital/adjusted assets (%)
81.2
68.7
69.5
87.9
76.2
Net nonperforming assets/customer loans + other real estate owned (%)
24.4
10.4
12.1
11.1
4.9
Net interest income/operating revenues (%)
65.7
69.3
42.4
55.8
81.9
0.1
0.1
0.1
0.1
-2.3
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
Growth in loss reserves (%)
4.6
3.2
2.3
1.8
-68.4
46.1
62.9
58.3
77.6
82.3
-16.5
14.9
52.7
-16.3
4.7
-3.3
18.2
-20.0
24.4
42.7
Growth in adjusted assets (%)
-15.3
1.0
26.6
9.0
0.2
YoY growth in loan loss provisions (%)
-30.9
-68.4
10.1
-38.8
-50.9
Stable funding ratio (%)
135.3
119.6
136.4
N/A
N/A
Short-term wholesale funding/total wholesale funding (%)
N/A
N/A
N/A
N/A
N/A
Total wholesale funding / funding base (%)
N/A
N/A
N/A
N/A
N/A
Short-term wholesale funding/funding base (%)
N/A
N/A
N/A
N/A
N/A
68
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Outlook
The stable outlook on Eximbanka mirrors that on
the Slovak Republic. Given the sovereign's high
dependence on exports, we expect Eximbanka
will continue to play a critical role in promoting the
government's economic policies and maintain its
integral link with the sovereign.
Any change in our assessment of Eximbanka's
role for or link with the government would lead us
to consider lowering the ratings on Eximbanka to
levels below those on the sovereign.
In addition, any change in the ratings on Slovakia
would trigger the same rating action on Eximbanka.
Export Import Bank of the Slovak Republic: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
151
174
200
200
141
16
17
15
14
15
0
0
0
0
0
210
252
219
144
172
36
38
32
40
32
Customer loans (net)
174
215
188
104
140
Earning assets
378
443
435
358
327
0
0
0
0
0
Period
Currency
Denomination
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Equity interests/participations (nonfinancial)
All other assets
12
13
11
7
3
Total assets
359
424
419
331
304
Adjusted assets
357
422
417
330
302
16
25
26
3
2
0
0
0
2
33
Other liabilities
51
107
101
34
37
Total Liabilities
67
132
127
38
72
Liabilities (category name - no data)
Total deposits
Other borrowings
Equity (category name - no data)
Total equity
292
292
292
293
232
Common shareholders' equity (reported)
292
292
292
293
232
79
60
54
51
39
Preprovision operating income
2
3
7
5
3
Credit loss provisions (net new)
1
2
7
6
10
Net income before extraordinaries
0
0
0
0
-7
Extraordinary income
0
0
0
0
0
Other items
Nonperforming assets
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
69
Summary Analysis
Export Credit Bank of Turkey
(Turk Eximbank)
Rationale
We equalize our ratings on Türk Eximbank with
those on its sole owner, the Republic of Turkey.
The ratings reflect our opinion that there is
an almost certain likelihood that the Turkish
government would provide timely and sufficient
extraordinary support to Türk Eximbank in case
of financial distress. In accordance with our
criteria for government-related entities, our rating
approach for Türk Eximbank is based on our view
of the bank's:
––Critical role in supporting Turkish exports, which
is a key focus of national economic development;
and
––Integral link with the Turkish government through
the sovereign's sole ownership, government
control of the board of directors, and the
sovereign's guarantee on the ultimate recovery of
losses on loans extended by the bank.
Türk Eximbank is the official state export credit
agency. Its mandate is to support foreign trade
and Turkish contractors and investors operating
abroad, through credit, guarantee, and insurance
programs. The bank does not compete against
commercial banks, but works closely with them,
encouraging them to increase their support
for the export sector. As well as offering direct
lending, the bank also provides insurance and
guarantees to Turkish exporters. Given the
bank's public policy role, financial indicators
come second to the business franchise. Türk
Eximbank's main objectives are to increase
the competitiveness of Turkish exporters and
contractors working abroad, and to create
opportunities for them in new markets. Further,
Türk Eximbank believes that, in the long term,
construction and investment abroad will play
an important role in increasing Turkey's foreign
currency earnings.
70
Central Government Agencies 2016 | September 2016
Outstanding loans extended by Türk Eximbank
have increased by nearly 5x since 2011 to reach
Turkish lira (TRY) 43.3 billion (US$14.8 billion)
in 2015. Over the same period, total assets
increased to 9.3x of total equity from 2.6x. Turk
Eximbank's direct and indirect exposure to the
Turkish banking sector is substantial. As of
end-December 2015, about 12.2% of the bank's
loans were to financial institutions and the rest
were guaranteed by banks. A deterioration of
the Turkish banking sector could weigh on Türk
Eximbank's financial performance, in our opinion.
Türk Eximbank's embedded credit risk can be
divided into sovereign risk and commercial risk.
The bank's sovereign risk is transferred to the
government by means of a guarantee issued by
the latter. In our understanding, this arrangement
constitutes an ultimate, but not a timely,
guarantee.
The bank provides loans to support Turkish
capital goods exports and projects abroad.
It is particularly active in financing Turkish
construction companies operating in the
Middle East and Africa. Accordingly, it can be
considered a sovereign risk under our criteria.
As Türk Eximbank expands relations with other
export credit agencies around the world, it could
extend nonguaranteed medium-term loans in the
form of project finance on a commercial basis.
However, we believe this will remain modest over
the medium term. The rest of Türk Eximbank's
portfolio contains more commercial risk than
sovereign risk. The risk to the bank's indirect
pre-export finance and bank-guaranteed direct
lending comes from exposure to Turkey's banking
system. The bank's insurance risks are reduced
through reinsurance.
Ratings:
BB/Negative/B
Last Ratings Action
And Date
Ratings lowered and
outlook revised to
negative on July 20,
2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To promote the
government's
export strategy by
supporting Turkish
exports.
Issuer Website:
www.eximbank.gov.tr
Primary Credit
Analyst:
Aarti Sakhuja
Madrid
(34) 91-788-7207
aarti.sakhuja@
spglobal.com
Secondary Credit
Analyst:
Trevor Cullinan
Dubai
(971) 4-372-7113
trevor.cullinan@
spglobal.com
Ratings At End June
2015:
BB+/Negative/B
Ratings At End June
2008:
BB-/Negative/B
Various bodies govern Türk Eximbank. The
highest ranked is the Supreme Advisory And
spglobal.com/ratings
Summary Analysis
Credit Guidance Committee, which is chaired
by the state minister in charge of the bank's
activities. The committee is the main decisionmaking authority for developing the bank's
strategy, and sets limits for credit, guarantees,
and insurance transactions. The state minister in
charge of the bank's activities selects the board of
directors. The bank's general manager is named
by decree, signed by the minister in charge of
the bank's activities, the prime minister, and the
Turkish president.
In our opinion, the government has demonstrated
its strong support for Türk Eximbank through
its repeated capital contributions to the bank's
equity base. These have been either directly
paid-in capital or retained earnings that are
managed by the bank and incorporated into its
total shareholder funds. Furthermore, losses
incurred by Türk Eximbank due to political
risk under its credit, guarantee, and insurance
programs are covered by the Turkish treasury.
As a 100% state-owned, wholesale bank, Türk
Eximbank does not accept deposits. Funding
from the Central Bank of the Republic of Turkey
finances most of Türk Eximbank's operations;
the remaining funding comes from market debt
issuance, syndicated and bilateral loans, and
loans from supranationals. Funding from the
central bank is only in foreign currency. However,
for rediscount facilities extended to exporters,
Export Credit Bank of Turkey: Selected Indicators
Period
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
TRY
TRY
TRY
TRY
TRY
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
18.4
23.4
25.3
24.2
40.4
Leverage ratio (%)
10.8
12.9
15.9
24.0
38.1
Total adjusted capital/adjusted assets (%)
10.8
12.8
15.9
24.0
38.1
Net nonperforming assets/customer loans + other real estate owned (%)
-0.3
-0.3
-0.5
-1.0
-0.6
101.8
102.8
101.4
100.5
76.2
1.1
1.3
0.9
1.4
2.4
70.0
70.1
60.0
56.2
66.3
197.9
173.9
192.6
210.6
134.3
35.4
38.9
71.9
63.9
91.1
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
Growth in loss reserves (%)
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
1.6
4.1
2.1
31.7
5.5
31.9
36.7
60.8
59.4
53.8
-57.9
95.2
-91.6
531.9
-39.5
14.4
31.3
34.0
51.2
63.9
96.0
79.9
80.2
72.4
73.5
100.0
100.0
100.0
100.0
100.0
96.0
79.9
80.2
72.4
73.5
spglobal.com/ratings
71
Summary Analysis
Türk Eximbank borrows the foreign currency
equivalent in Turkish lira from the central bank
and repays these loans in foreign currency,
thereby contributing to the accumulation of the
country's foreign reserves.
We do not anticipate any changes to Türk
Eximbank's underlying role for the national
economy or to its close links with the Turkish state.
Outlook
The negative outlook on Türk Eximbank mirrors
that on the Republic of Turkey. Any change to
the ratings on Turkey will likely result in a similar
rating action on Türk Eximbank. Conversely, any
change in our assessment of Türk Eximbank's
critical role for or integral link with the
government could lead us to consider lowering the
ratings on Türk Eximbank below those on Turkey.
Export Credit Bank of Turkey: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
TRY
TRY
TRY
TRY
TRY
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
166
1067
1019
1216
667
Securities
285
369
369
803
866
Period
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
0
0
0
0
0
43314
31998
23042
13405
8180
261
256
246
241
183
Customer loans (net)
43054
31741
22795
13163
7997
Earning assets
43763
33433
24430
15403
9688
Equity interests/participations (nonfinancial)
0
0
0
0
0
663
274
285
42
27
Total assets
44292
33583
24561
15272
9583
Adjusted assets
44290
33582
24560
15271
9583
0
0
0
0
0
All other assets
Liabilities (category name - no data)
Total deposits
38398
28661
20055
11357
5788
Other liabilities
Other borrowings
1113
606
602
238
147
Total Liabilities
39511
29268
20658
11596
5935
Total equity
4782
4316
3903
3676
3648
Common shareholders' equity (reported)
4782
4316
3903
3676
3648
Equity (category name - no data)
Other items
Nonperforming assets
132
147
128
115
136
Preprovision operating income
495
440
235
284
241
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
72
Central Government Agencies 2016 | September 2016
4
10
5
61
10
489
429
246
221
230
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
Export Development Canada
(EDC)
Rationale
The ratings on EDC reflect our assessment
of EDC's critical role in supporting Canadian
exporters, owing to the importance of the trade
sector to the national economy; and its integral
link with the government of Canada. This results in
our view that the likelihood of EDC receiving timely
and sufficient extraordinary government support
is almost certain. Moreover, we consider EDC's
status as an agent crown corporation (an agent of
Her Majesty in right of Canada) and the provision
that the corporation's debt constitutes a direct
obligation of the government and is a charge on
and payable out of the government's consolidated
revenues fund (CRF), effectively obligating the
government to service the debt on a timely basis.
We also believe that the likelihood of extraordinary
support is not subject to transition risk, given that
the corporation executes strategic policies on
behalf of the federal government.
EDC is wholly owned by the Canadian
government. It was established in 1944, and its
mandate is to support and develop, directly and
indirectly, Canada's export trade and Canadian
capacity to engage in trade as well as respond
to international business opportunities. EDC
provides insurance and financial services,
bonding products, and small business solutions
to Canadian exporters and investors and their
international buyers. It also supports Canadian
direct investment abroad and investment
into Canada. EDC often works in partnership
with other financial institutions and through
collaboration with the government of Canada. As
a crown corporation, EDC is able to raise funds
efficiently and support Canadian exporters
and investors, even through difficult financial
times when private-sector lenders may face
constraints. This ensures Canadian exporters
and investors have access to credit through the
business cycle.
Central Government Agencies 2016 | September 2016
Ratings:
AAA/Stable/A-1+
EDC operates on a financially self-sufficient basis
and it issues and services its own debt from its
own resources. However, as EDC is an agent of
the crown, its borrowings can be serviced by the
government of Canada's consolidated revenue
fund, which is the same fund used to service
the government's own direct debt. Contingent
liabilities must not exceed 10x the corporation's
equity and C$45 billion. Moreover, EDC's loans
payable must not exceed 15x the aggregate paid-in
capital and retained earnings. EDC's aggregate
paid-in capital was C$125.6 billion in 2014 while
its loans payable were C$38 billion. We expect
it to continue to pay its liabilities from its own
resources, and that access to the CRF would be
limited to an extraordinary circumstance.
Based on the Export Canada Act, the Canada
Financial Administration Act, and other relevant
laws, we believe EDC's borrowings reflect the full
faith and credit of the government of Canada. We
consider the support provided to EDC debt under
the legislative framework to be like a guarantee,
only stronger. Although we understand that nonborrowing liabilities arising from the corporation's
business activities do not enjoy the same legal
status as its borrowings, we nevertheless judge the
likelihood of government support for EDC's nonborrowing liabilities as almost certain under our
criteria for rating government-related entities.
We have not determined a stand-alone credit
profile for EDC because of our assessment of
the almost certain likelihood of extraordinary
government support. We believe that EDC's
support of Canadian exporters, especially during
difficult economic times, and its administration of
the Canada Account make it difficult to replace the
corporation with a private entity. We expect that
EDC will continue to play a key role in financing and
facilitating Canadian export trade, and receive the
government's full support when needed.
Last Ratings Action
And Date
Ratings and outlook
affirmed on Jan. 29,
2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To support and
develop, directly and
indirectly, Canada's
export trade and
Canadian capacity
to engage in trade as
well as respond to
international business
opportunities.
Issuer Website:
www.edc.ca
Primary Credit
Analyst:
Jennifer Love, CFA
Toronto
(1) 416-507-3285
jennifer.love@
spglobal.com
Secondary Credit
Analyst:
Stephen Ogilvie
Toronto
(1) 416-507-2524
stephen.ogilvie@
spglobal.com
Ratings At End June
2015:
AAA/Stable/A-1+
Ratings At End June
2008:
AAA/Stable/A-1+
spglobal.com/ratings
73
Summary Analysis
EDC holds cash and marketable securities of
C$7.69 billion as of Dec. 31, 2015, compared
with loans payable of C$45.91 billion. EDC had
C$8.2 billion of short-term debt maturing over
the course of 2015. The corporation's treasury
department manages its liquidity. It does so
based on internal policies and procedures,
and monitors its liquidity daily. EDC maintains
sufficient liquidity based on forecast cash
requirements. Additionally, we expect it would
borrow money from the government quickly if it
needed funds above its internal resources.
Outlook
The stable outlook on EDC mirrors that on
Canada, and reflects S&P Global Ratings'
expectation that the corporation will continue
to play a key role in the government's economic
policy. Policy developments that, in our opinion,
signal a reduction of the government's support
for EDC's policy role could cause us to de-link
the rating and outlook on the corporation from
those on its owner. In addition, a lowering of
the ratings on Canada would result in a similar
downgrade of EDC.
Export Development Canada: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
C$
C$
C$
C$
C$
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
15.0
16.8
20.4
25.3
25.5
Total adjusted capital/adjusted assets (%)
14.9
16.7
20.1
24.4
24.5
Net nonperforming assets/customer loans + other real estate owned (%)
-1.5
-1.2
-1.8
-0.1
0.5
Net interest income/operating revenues (%)
74.2
79.8
94.9
75.9
84.3
1.5
2.3
2.0
3.7
1.9
Period
Currency
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
53.1
77.1
67.7
99.9
59.4
181.9
176.2
208.0
101.9
93.1
Growth in customer loans (%)
27.8
14.4
20.7
5.1
7.8
Growth in loss reserves (%)
47.6
-7.1
4.3
-29.9
4.8
Loan loss reserves/gross nonperforming assets (%)
Growth in adjusted assets (%)
24.4
18.0
14.6
7.9
5.4
YoY growth in loan loss provisions (%)
N.M.
-230.0
N.M.
-372.0
N.M.
Stable funding ratio (%)
68.4
61.1
67.7
79.0
76.2
Short-term wholesale funding/total wholesale funding (%)
40.2
51.3
44.9
38.0
42.1
100.0
100.0
100.0
100.0
100.0
40.2
51.3
44.9
38.0
42.1
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
74
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Export Development Canada: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
C$
C$
C$
C$
C$
Mil.
Mil.
Mil.
Mil.
Mil.
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
438
69
127
80
90
8104
7165
4476
4585
4181
0
0
0
0
0
53136
41586
36357
30131
28680
1715
1163
1246
1182
1680
Customer loans (net)
51421
40423
35111
28949
27000
Earning assets
61240
48751
40833
34716
32861
0
0
0
0
0
Equity interests/participations (nonfinancial)
320
641
280
389
347
Total assets
All other assets
60969
49004
41516
36233
33596
Adjusted assets
60898
48948
41472
36195
33556
0
0
0
0
0
Liabilities (category name - no data)
Total deposits
Other borrowings
47125
38259
31476
26099
23795
Other liabilities
4463
2384
1507
1091
1298
Total Liabilities
51804
40788
33145
27358
25340
Total equity
9165
8216
8371
8875
8256
Common shareholders' equity (reported)
9165
8216
8371
8875
8256
943
660
599
1160
1805
Preprovision operating income
1362
1090
847
987
770
Credit loss provisions (net new)
437
-39
30
-340
125
Net income before extraordinaries
925
1129
817
1327
645
0
0
0
0
0
Equity (category name - no data)
Other items
Nonperforming assets
Extraordinary income
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
75
Summary Analysis
Export Finance & Insurance Corp
(Efic)
Rationale
We equalize our ratings on Efic with those on its
parent entity, the Commonwealth of Australia.
The rating incorporates our assessment of
the Commonwealth of Australia's legislative
guarantee of Efic's obligations as they fall due.
While Efic is a government-related entity (GRE),
our ratings rely on our criteria for sovereignguaranteed debt. If we were to assess Efic
according to the GRE criteria, we would take into
account that Efic:
of Debt Instruments (US$2.5 billion), there are
defined grace periods of 30 days on interest and
15 days on principal payments, in addition to a
notice period of seven days.
We expect that the government support, if
needed, will be made available within the above
time frames, because:
––The Australian government budget explicitly
states, within the list of its quantifiable
contingent liabilities, that the Australian
government guarantees the due payment of
––Is essentially an independent not-for-profit
money that is, or may at any time become,
entity that plays a role in meeting key economic,
payable by Efic to anybody other than the
social, and political objectives of the government
government;
and facilitates key national policy, namely
supporting Australian exports and overseas aid
––We believe that a parliamentary vote is not
payments;
required for the timely release of funding
support, if needed; and
––Administers the Australian government's
aid-supported mixed-credit program and
––We believe that the government would
participates in Australian government
receive timely information on any potential
negotiations at the Paris Club. The government
impediments in Efic's ability to meet its
also uses Efic to support its foreign policies,
debt obligations in a timely manner because
such as, on occasion, refraining from conducting
Efic's operations are overseen by an
transactions in countries against which
independent board that includes a government
Australia has trade sanctions; and
representative.
––Is a wholly owned statutory corporation of the
Efic remains well capitalized with over A$400
Commonwealth of Australia, which provides a
legislative guarantee of Efic's obligations as they million equity, and can access additional capital
through a A$200 million callable capital facility
fall due. The government has clear and robust
processes and procedures in place that enables from its parent. As of March 31, 2016, Efic's
total exposures of A$3.5 billion accounted for
effective governance, monitoring and control.
around 0.9% of the Commonwealth of Australia's
Further, the government has the administrative
estimated revenue over fiscal 2016. Of these
capacity and mechanisms in place to provide
exposures, A$2.9 billion (83%) relate to Efic's
timely assistance to Efic, if required.
Commercial Account. Finally, the Australian
Prudential Regulation Authority recognizes
When assessing Efic according to the sovereignEfic’s debt securities as eligible high-quality
guaranteed debt criteria, we take comfort that
liquid assets for the purposes of banks’ Basel III
Efic's debt terms have defined grace periods.
Liquidity Coverage Ratio requirements.
For example, in Efic's Program For The Issuance
76
Central Government Agencies 2016 | September 2016
Ratings:
AAA/Negative/A-1+
Last Ratings Action
And Date
Ratings affirmed on
Jul. 6, 2016
SACP:
N/A
LOS:
N/A
Role:
N/A
Link:
N/A
Key Policy Role:
Efic’s primary
purpose is to
facilitate and
encourage Australian
export trade through
the provision of
insurance and
financial services
and products to
companies. Also, it
encourages banks
and other financial
institutions carrying
on business in
Australia to finance,
or assist in financing,
export contracts
or eligible export
transactions.
Issuer Website:
www.efic.gov.au
Primary Credit
Analyst:
Michael D Puli
Sydney
(61) 2-9255-9823
michael.puli@
spglobal.com
Secondary Credit
Analyst:
Nico N DeLange
Sydney
(61) 2-9255-9887
nico.delange@
spglobal.com
Ratings At End June
2015:
AAA/Stable/A-1+
Ratings At End June
2008:
AAA/Stable/A-1+
spglobal.com/ratings
Summary Analysis
Outlook
The negative outlook on Efic reflects the outlook
on its parent and guarantor, the Commonwealth
of Australia. There is a one-in-three chance that
we could lower the rating within the next two
years. The ratings on Efic remain equalized with
those on its parent, reflecting the legislative
guarantee of Efic's obligations. Therefore,
a lowering of the ratings on Australia, or a
weakening of the guarantee, would put pressure
on our ratings on Efic.
Export Finance & Insurance Corp: Selected Indicators
Year to June 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
A$
A$
A$
A$
A$
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
14.4
8.9
8.2
14.3
15.2
Total adjusted capital/adjusted assets (%)
13.6
8.4
7.6
12.6
13.3
Period
Currency
Net nonperforming assets/customer loans + other real estate owned (%)
-1.7
-0.4
1.9
-0.5
0.3
Net interest income/operating revenues (%)
60.3
45.0
54.9
61.6
69.5
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
0.6
0.9
0.8
0.8
1.0
42.5
50.6
37.9
43.3
53.0
313.2
131.4
56.1
122.6
88.7
Growth in customer loans (%)
22.7
-0.9
15.1
13.2
-9.7
Growth in loss reserves (%)
77.6
-27.6
0.3
21.0
24.0
Growth in adjusted assets (%)
20.8
-2.8
-17.3
7.8
12.4
YoY growth in loan loss provisions (%)
N.M.
-142.2
21.4
265.2
N.M.
Stable funding ratio (%)
84.8
89.7
90.5
99.9
122.2
Short-term wholesale funding/total wholesale funding (%)
39.4
36.7
35.2
52.8
35.8
100.0
100.0
100.0
100.0
100.0
39.4
36.7
35.2
52.8
35.8
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
77
Summary Analysis
Export Finance & Insurance Corp: Summary Balance Sheet
Year to June 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
A$
A$
A$
A$
A$
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
171
152
130
553
80
Securities
843
682
745
842
1268
28
30
37
40
43
1932
1575
1589
1380
1219
48
27
37
37
31
Period
Currency
Denomination
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
1885
1548
1552
1343
1188
Earning assets
2973
2437
2501
2814
2610
Equity interests/participations (nonfinancial)
0
0
0
0
0
All other assets
1
2
1
1
1
Total assets
3178
2631
2707
3274
3036
Adjusted assets
3178
2631
2707
3274
3036
69
45
62
57
44
2278
2175
2194
2603
2385
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
395
185
234
195
199
Total Liabilities
2742
2405
2490
2856
2628
Total equity
437
226
216
418
408
Common shareholders' equity (reported)
437
226
216
418
408
Equity (category name - no data)
Other items
Nonperforming assets
15
20
66
30
34
Preprovision operating income
11
20
33
35
33
Credit loss provisions (net new)
-7
-4
10
8
2
Net income before extraordinaries
18
24
23
27
30
0
0
0
0
0
Extraordinary income
78
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Fannie Mae
Rationale
The ratings on Fannie Mae's senior and
subordinated debt reflect the U.S. government's
ongoing financial support of the company and
the Federal Housing Finance Agency's (FHFA)
oversight and operational involvement as its
regulator and conservator. The likelihood of
extraordinary government support we factor into
the ratings stems from the firm's integral link
to the government as a public-policy financial
institution, under our criteria for governmentrelated entities (GREs), as well as its critical role in
implementing government programs that prevent
foreclosures and stabilize the housing sector.
In accordance with our criteria for GREs, our
view of government support is based on our
assessment of Fannie Mae's:
––Critical role as a leading provider of secondarymarket liquidity to U.S. mortgage lenders,
supporting a large portion of mortgage
originations in the U.S. housing industry, with
support for the latter a key economic and
political objective of the U.S. government; and
––Integral link with the U.S. government, which
is demonstrated by the U.S. Treasury's $117.1
billion preferred equity investment as of Dec.
31, 2015, and the government's close oversight
of Fannie Mae's strategy and operations via
the FHFA. This is one of two housing GREs that
Congress federally chartered and created.
Our long-term rating on Fannie Mae's senior
unsecured debt is the same as our rating on
the U.S., while our rating on the company's
subordinated debt is 'AA-', due to the issue's
subordination and deferability. This reflects the
almost certain likelihood, in our assessment,
of the U.S. government providing extraordinary
support to Fannie Mae, if needed, in addition to
the government's ongoing support, including via
the Senior Preferred Stock Purchase Agreement
Central Government Agencies 2016 | September 2016
Ratings:
AA+/Stable/A-1+
(senior unsecured
rating)
(PSPA) with the U.S. Treasury and the FHFA's
oversight and operational involvement as Fannie
Mae's regulator and conservator.
The FHFA suspended the interest-deferral
covenant on Fannie Mae's subordinated debt
during the early stages of its conservatorship,
allowing the company to continue paying
interest on its subordinated debt despite its
deteriorating financial position. We recognize
the structural superiority of the senior and
subordinated debt issues to the U.S. Treasury's
preferred stock investment. We also incorporate
our belief that the FHFA will continue to direct
the company to pay interest and principal while
Fannie Mae is in conservatorship, as the FHFA
has previously stated.
Considering the critical role GREs play in the
U.S. housing market and the country's sluggish
economic recovery, we believe that Fannie
Mae's role in providing mortgage financing
makes any near-term change in the likelihood
of extraordinary government support unlikely.
Future housing finance reform legislation
could significantly affect the company's
business position and policy role. Nevertheless,
comprehensive housing finance reform
remains elusive. The Obama administration
has detailed its desire for Fannie Mae and
Freddie Mac to be wound down, but reiterated
in late 2015 that it does not support the
entities exiting conservatorship in the absence
of comprehensive housing finance reform.
Moreover, the Consolidated Appropriations Act
2016, included a provision that prohibits the
Treasury from selling or otherwise disposing of
the preferred stock it holds in Fannie Mae or
Freddie Mac until Jan. 1, 2018, unless legislation
instructing the Treasury on how to do so is
enacted into law. Due to a lack of consensus
among U.S. lawmakers as to how to reform the
country's housing finance system, we expect the
conservatorships to continue in the current form
Last Ratings Action
And Date
Outlook to Stable,
June 10th, 2013
SACP:
ccc+
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
Fannie Mae provides
secondary-market
liquidity to U.S.
mortgage lenders,
supporting a large
portion of the
mortgage originations
in the U.S. housing
market, with support
for the latter being
a key economic and
political objective of
the U.S. Government.
Issuer Website:
www.fanniemae.com
Primary Credit
Analyst:
Nikola G Swann, CFA,
FRM
Toronto
(1) 416-507-2582
nikola.swann@
spglobal.com
Secondary Credit
Analyst:
Devi Aurora
New York
(1) 212-438-3055
devi.aurora@
spglobal.com
Ratings At End June
2015:
AA+/Stable/A-1+
(senior unsecured
rating)
Ratings At End June
2008:
AAA/Stable/A-1+
(senior unsecured
rating)
spglobal.com/ratings
79
Summary Analysis
in the foreseeable future, barring catalysts we
view as unlikely.
Fannie Mae's stand-alone credit profile largely
reflects its capital base, which is near zero (as a
percentage of assets) due to a 2012 amendment
to the company's PSPA with the U.S. Treasury
that prevents it from building capital through
earnings. The capital deficiency outweighs
the company's other business strengths on a
stand-alone basis, in our view.
Our rating on Fannie Mae's preferred stock is
'D' (default). As part of the company's PSPA
with the U.S. Treasury in 2008, Fannie Mae
was required to suspend the dividends on its
common and preferred shares. The company
would need Treasury approval to resume these
payments.
Outlook
The stable outlooks on our ratings on Fannie
Mae's debt issues reflect the stable outlook on
our sovereign rating on the U.S. We could raise or
lower our ratings on these debt instruments if we
raise or lower our rating on the U.S. Alternatively,
if we believed that the likelihood of extraordinary
government support for Fannie Mae was waning, we
could also lower the rating.
Fannie Mae's relationship with the U.S. government
is a main rating factor. We do not envision any
change in the likelihood of extraordinary government
support for Fannie Mae's senior or subordinated
unsecured obligations. When it becomes clearer to
us how the company will position itself as it emerges
from conservatorship, whether as a viable entity or
placed into receivership, we will assign an issuer
credit rating accordingly.
Fannie Mae: Selected Indicators
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
$
$
$
$
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N.M.
N.M.
N.M.
N.M.
Leverage ratio (%)
N.M.
N.M.
N.M.
N.M.
Total adjusted capital/adjusted assets (%)
N.M.
N.M.
N.M.
N.M.
5.6
6.1
6.4
6.9
Period
Currency
Denomination
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
95.9
90.7
67.1
108.6
Core earnings/ Adjusted assets (%)
N.M.
N.M.
N.M.
N.M.
Core earnings/operating revenues (%)
N.M.
N.M.
N.M.
N.M.
Loan loss reserves**/gross nonperforming assets (%)
14.1
16.0
18.5
22.2
Growth in customer loans*** (%)
-0.3
-0.4
1.9
1.3
Growth in loss reserves** (%)
-22.3
-18.8
-24.5
-17.9
Growth in adjusted assets (%)
-0.8
-0.7
1.5
0.3
YoY growth in loan loss provisions (%)
N.M.
N.M.
N.M.
N.M.
Stable funding ratio (%)
N.M.
N.M.
N.M.
N.M.
Short-term wholesale funding/total wholesale funding (%)
N.M.
N.M.
N.M.
N.M.
Total wholesale funding / funding base (%)
N.M.
N.M.
N.M.
N.M.
Short-term wholesale funding/funding base (%)
N.M.
N.M.
N.M.
N.M.
80
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Fannie Mae: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
$
$
$
$
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
42,024
52,973.
58,203
53,617
Securities
60,138
62,158
68,939
103,876
Period
Currency
Denomination
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
N.M.
N.M.
N.M.
N.M.
3051903
3060594
3073813
3015793
27951
35541
43846
58795
Customer loans (net)
3023952
3025053
3029967
2956998
Earning assets
3139391
3153702
3181727
3152169
N.M.
N.M.
N.M.
N.M.
Equity interests/participations (nonfinancial)
All other assets
N.M.
N.M.
N.M.
N.M.
Total assets
3221917
3248176
3270108
3222422
Adjusted assets
3221917
3248176
3270108
3222422
0
0
0
0
3333950
3358434
3370802
3325796
N.M.
N.M.
N.M.
N.M.
3354137
3380735
3396796
3351477
-132220
-132559
-126688
-129055
N.M.
N.M.
N.M.
N.M.
197641
221456
237131
264894
16790
18292
30102
16249
Liabilities (category name - no data)
Total deposits
Other borrowings^
Other liabilities
Total Liabilities^
Equity (category name - no data)
Total equity^
Common shareholders' equity (reported)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries^^
Extraordinary income
-795
-3964
-8949
-852
10954
14208
83963
17224
N.M.
N.M.
N.M.
N.M.
*All figures as reported in Form 10-K for the applicable year, unless otherwise specified.
**Allowance for loan losses.
***Measures growth in gross customer loans.
^We treat Freddie Mac's preferred shares as liabilities, as we do not expect these to be sufficiently loss-absorbing to qualify for our measure of equity.
^^Net income attributable to Fannie Mae.
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
81
Summary Analysis
FMS Wertmanagement Anstalt des
oeffentlichen Rechts (FMSM)
Rationale
We equalize our ratings on German nonbank
workout entity FMSW with the ratings on FMSW's
indirect owner and support provider, the German
government. In accordance with our criteria for
government-related entities (GREs), we believe
that there is an almost certain likelihood that the
German government would provide timely and
sufficient extraordinary support to FMSW in an
event of financial distress. This is based on our
view of FMSW's:
(FMSA). This obligation comes on top of an earlier
commitment to cover all losses of FMSW. It also
supports our assessment of the almost certain
likelihood of government support for FMSW.
We believe that the prospect of extraordinary
government support for German commercial
banks is now uncertain, following the full
implementation of the EU Bank Recovery and
Resolution Directive, including bail-in powers, in
January 2015. Despite the reduced predictability
of government support to systemically important
commercial banks, we expect Germany to remain
––Critical role in facilitating the workout of the
supportive of FMSW. The bank recovery and
Hypo Real Estate group's nonstrategic and
resolution regime does not affect the owner's
nonperforming assets and helping to restore
financial market stability in Germany and bolster willingness to support FMSW, in our opinion.
confidence in the country's financial sector; and FMSW is not a financial institution and is not
subject to the bail in clause.
––Integral link with the German government
FMSW is a nonbank workout entity established
because of the agency's ownership structure
in 2010 under Germany's Financial Market
and the existence of an explicit and credible
Stabilization Fund Act. In its relations with
state-support mechanism. FMSW operates
FMSW, Germany acts through FMSA and SoFFin.
essentially on behalf and at the risk of the
The FMSA administers SoFFin and supervises
government.
FMSW, while SoFFin is the sole owner of
FMSW. We expect FMSW to receive government
We regard the German government's propensity
support over the run-off period to compensate
to support as not doubtful, and we believe that
the government has sufficient financial resources for potential losses. Weak asset quality of the
transferred portfolios and high concentrations
to support FMSW. We expect FMSW's public
policy role as a workout agency will continue until make FMSW's performance very sensitive to
event risks.
its task is complete. We do not expect FMSW's
ownership status or the state-support mechanism
From its inception until year-end 2014, FMSW
to weaken.
generated net losses of €13 billion. Accumulated
losses have quickly depleted the agency's
In 2014, the German government amended
original capital base, and FMSW offsets losses
legislation that deals with wind-up institutions
through claims for loss compensation from
to include a more explicit loss compensation
SoFFin. The loss relates to the period until yearobligation. As per the amendment, until the
end 2011, and the entity has reported positive
dissolution of FMSW, the Financial Market
Stabilization Funf (SoFFin) will be held responsible net profits since then. However, we note that
internal capital accumulation remains negligible
for the liabilities incurred at FMSW and the
Federal Agency for Financial Market Stabilization in relation to the entity's size and risk profile,
82
Central Government Agencies 2016 | September 2016
Ratings:
AAA/Stable/A-1+
Last Ratings Action
And Date
Ratings affirmed on
Jan. 25, 2012
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To act as a key agency
for the workout of
the Hypo Real Estate
group's nonstrategic
and nonperforming
assets.
Issuer Website:
www.fms-wm.de/en/
Primary Credit
Analyst:
Heiko Verhaag
Frankfurt
(49) 69-33-999-215
heiko.verhaag@
spglobal.com
Secondary Credit
Analyst:
Felix Winnekens
Frankfurt
(49) 69-33-999-245
felix.winnekens@
spglobal.com
Ratings At End June
2015:
AAA/Stable/A-1+
Ratings At End June
2008:
N/A
spglobal.com/ratings
Summary Analysis
reflecting concentrations, and annual results
are still very sensitive to event risks.
In 2014, the German authorities ordered the
transfer of the ownership of Depfa Bank PLC
(Depfa) to FMSW from Hypo Real Estate group
to wind down Depfa's assets. Depfa group banks
retained their legal entity status following the
transfer. Even though FMSW has the oversight
of Depfa and heavily influences the strategic
aspects of the wind down, Depfa's new
management team has the primary responsibility
for the wind down of the Depfa group.
The ownership transfer has not affected
FMSW's creditworthiness. However, we highlight
the operational risks that accompany the
integration of the complex Depfa group into
FMSW and newly set up monitoring and control
procedures
Outlook
Our stable outlook on FMSW reflects that on
Germany. As a result, any rating action on
Germany will prompt a similar rating action
on FMSW. Any weakening in our assessment
of FMSW's role for and link to Germany could
cause us to take a negative rating action on
the agency. However, we currently do not
anticipate any adverse changes. We believe
that the likelihood of FMSW receiving support
from Germany is almost certain and that the
agency's current status as a GRE will remain
unchanged over the coming two years.
FMS Wertmanagement Anstalt des oeffentlichen Rechts: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
0.4
0.2
0.1
0.0
0.0
Total adjusted capital/adjusted assets (%)
0.4
0.2
0.1
0.0
0.0
Period
Currency
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
N/A
N/A
N/A
N/A
N/A
83.8
86.8
80.5
88.4
86.1
0.2
0.2
0.1
0.0
-2.9
45.9
51.7
15.6
4.4
-1552.9
N/A
N/A
N/A
N/A
N/A
Growth in customer loans (%)
-23.5
-21.0
16.1
-16.5
-16.0
Growth in loss reserves (%)
N.M.
N.M.
N.M.
N.M.
N.M.
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
-6.8
-2.1
-23.8
-27.9
2.5
N.M.
-112.2
-39.1
-95.8
245.2
164.3
147.0
120.0
N/A
N/A
50.4
54.1
58.9
50.5
66.8
Total wholesale funding / funding base (%)
90.9
89.4
84.4
83.5
93.2
Short-term wholesale funding/funding base (%)
45.8
48.4
49.7
42.2
62.3
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
83
Summary Analysis
FMS Wertmanagement Anstalt des oeffentlichen Rechts: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
33616
30266
16875
24645
28431
113481
119756
130925
169624
244997
3009
6338
7117
15022
21178
17128
22397
28359
24428
29259
0
0
0
0
0
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
Earning assets
Equity interests/participations (nonfinancial)
17128
22397
28359
24428
29259
164273
178669
182893
233719
323865
69
139
81
63
63
271
791
51
7413
9985
Total assets
171108
183629
187664
246423
341766
Adjusted assets
171105
183628
187654
246422
341764
37272
37851
48204
79536
134142
116306
127494
121189
147235
181558
All other assets
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
16802
17852
18152
19618
26066
Total Liabilities
170380
183197
187546
246388
341766
Total equity
728
432
119
35
0
Common shareholders' equity (reported)
728
432
119
35
0
Equity (category name - no data)
Other items
Nonperforming assets
N/A
N/A
N/A
N/A
N/A
Preprovision operating income
378
340
415
471
294
Credit loss provisions (net new)
-35
-32
263
432
10254
Net income before extraordinaries
296
313
117
33
-2
0
0
0
0
0
Extraordinary income
84
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Freddie Mac
Rationale
The ratings on Freddie Mac's senior and
subordinated debt reflect the U.S. government's
ongoing financial support of the company and
the Federal Housing Finance Agency's (FHFA)
oversight and operational involvement as its
regulator and conservator. The likelihood of
extraordinary government support we factor into
our ratings on Freddie Mac's debt stems from the
firm's integral link to the government, as a publicpolicy financial institution, under our criteria
for government-related entities (GREs), as well
as its critical role in implementing government
programs that prevent foreclosures and stabilize
the housing sector.
In accordance with our criteria for GREs, our
view of government support is based on our
assessment of Freddie Mac's:
Ratings:
AA+/Stable/A-1+
(senior unsecured
rating)
(PSPA) with the U.S. Treasury and the FHFA's
oversight and operational involvement as
Freddie Mac's regulator and conservator.
Last Ratings Action
And Date
Outlook to Stable,
June 10th, 2013
The FHFA suspended the interest-deferral
covenant on Freddie Mac's subordinated debt
during the early stages of its conservatorship,
allowing the company to continue paying
interest on its subordinated debt despite its
deteriorating financial position. We recognize
the structural superiority of the senior and
subordinated debt issues to the U.S. Treasury's
preferred stock investment. We also incorporate
our belief that the FHFA will continue to direct
the company to pay interest and principal on all
debt while Freddie Mac is in conservatorship, as
the FHFA has previously stated.
Considering the critical role GREs play in the
U.S. housing market and the country's sluggish
economic recovery, we believe that Freddie
––Critical role as a leading provider of secondaryMac's role in providing mortgage financing
market liquidity to U.S. mortgage lenders,
makes any near-term change in the likelihood
supporting a large portion of mortgage
of extraordinary government support unlikely.
originations in the U.S. housing industry, with
Future housing finance reform legislation
support for the latter a key economic and
could significantly affect the company's
political objective of the U.S. government, in our
business position and policy role. Nevertheless,
opinion; and
comprehensive housing finance reform
remains elusive. The Obama administration
––Integral link with the U.S. government, which is
demonstrated by the U.S. Treasury's $72.3 billion has detailed its desire for Fannie Mae and
Freddie Mac to be wound down, but reiterated
preferred equity investment as of Dec. 31, 2015,
and the government's close oversight of Freddie in late 2015 that it does not support the
entities exiting conservatorship in the absence
Mac's strategy and operations via the FHFA.
of comprehensive housing finance reform.
Moreover, the Consolidated Appropriations Act
Our long-term rating on Freddie Mac's senior
2016, included a provision that prohibits the
unsecured debt is the same as our rating on
Treasury from selling or otherwise disposing
the U.S., while our rating on the company's
of the preferred stock it holds in Fannie Mae or
subordinated debt is 'AA-', due to the issue's
Freddie Mac until Jan. 1, 2018, unless legislation
subordination and deferability. This reflects the
instructing the Treasury on how to do so is
almost-certain likelihood, in our assessment,
enacted into law. Due to a lack of consensus
of the U.S. government providing extraordinary
among U.S. lawmakers as to how to reform the
support to Freddie Mac, if needed, in addition to
country's housing finance system, we expect the
the government's ongoing support, including via
conservatorships to continue in the current form
the Senior Preferred Stock Purchase Agreement
Central Government Agencies 2016 | September 2016
SACP:
ccc+
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
Freddie Mac provides
secondary-market
liquidity to U.S.
mortgage lenders,
supporting a large
portion of the
mortgage originations
in the U.S. housing
market, with support
for the latter being
a key economic and
political objective of
the U.S. Government.
Issuer Website:
www.freddiemac.com
Primary Credit
Analyst:
Nikola G Swann, CFA,
FRM
Toronto
(1) 416-507-2582
nikola.swann@
spglobal.com
Secondary Credit
Analyst:
Devi Aurora
New York
(1) 212-438-3055
devi.aurora@
spglobal.com
Ratings At End June
2015:
AA+/Stable/A-1+
(senior unsecured
rating)
Ratings At End June
2008:
AAA/Stable/A-1+
(senior unsecured
rating)
spglobal.com/ratings
85
Summary Analysis
for the foreseeable future, barring catalysts we
view as unlikely.
Freddie Mac's stand-alone credit profile is
largely a reflection of its capital base, which
is near zero (as a percentage of assets) due
to a 2012 amendment to the company's PSPA
with the U.S. Treasury that prevents it from
building capital through earnings. The capital
deficiency outweighs the company's other
business strengths on a stand-alone basis, in
our view.
Our rating on Freddie Mac's preferred stock
is 'D' (default). As part of the company's PSPA
with the U.S. Treasury in 2008, Freddie Mac
was required to suspend the dividends on its
common and preferred shares. The company
would need Treasury approval to resume these
payments.
Outlook
The stable outlooks on our ratings on Freddie
Mac's debt issues reflect the stable outlook on
our sovereign rating on the U.S. We could raise or
lower our ratings on these debt instruments if we
raise or lower our rating on the U.S. Alternatively,
if we believed that the likelihood of extraordinary
government support for Freddie Mac was waning,
we could also lower the ratings.
Freddie Mac's relationship with the U.S.
government is a main rating factor. We do
not envision any change in the likelihood of
extraordinary government support for Freddie
Mac's senior or subordinated unsecured
obligations. When it becomes clearer to us how
the company will position itself as it emerges
from conservatorship, whether as a viable entity
or placed into receivership, we will assign an
issuer credit rating accordingly.
Freddie Mac: Selected Indicators
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
$
$
$
$
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N.M.
N.M.
N.M.
N.M.
Leverage ratio (%)
N.M.
N.M.
N.M.
N.M.
Total adjusted capital/adjusted assets (%)
N.M.
N.M.
N.M.
N.M.
5.2
5.7
6.0
6.1
Period
Currency
Denomination
Net nonperforming assets**/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans*** (%)
106.3
64.0
74.2
110.0
N.M.
N.M.
N.M.
N.M.
N.M.
N.M.
N.M.
N.M.
14.37
18.35
19.43
22.92
2.74
0.76
-0.45
-5.68
-29.61
-11.49
-19.94
-21.72
Growth in adjusted assets (%)
2.08
-1.04
-1.20
-7.33
YoY growth in loan loss provisions (%)
N.M.
N.M.
N.M.
N.M.
Stable funding ratio (%)
N.M.
N.M.
N.M.
N.M.
Short-term wholesale funding/total wholesale funding (%)
N.M.
N.M.
N.M.
N.M.
Total wholesale funding / funding base (%)
N.M.
N.M.
N.M.
N.M.
Short-term wholesale funding/funding base (%)
N.M.
N.M.
N.M.
N.M.
Growth in loss reserves (%)
86
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Freddie Mac: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
$
$
$
$
Mil.
Mil.
Mil.
Mil.
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
69239
62831
73664
46076
114215
136987
152323
216388
N.M.
N.M.
N.M.
N.M.
1769524
1722341
1709408
1717054
Loan loss reserves**
15331
21761
24618
30707
Customer loans (net)
1754193
1700580
1684790
1686347
Earning assets
1947383
1911231
1924114
1971005
N.M.
N.M.
N.M.
N.M.
Equity interests/participations (nonfinancial)
All other assets
N.M.
N.M.
N.M.
N.M.
Total assets
1986050
1945539
1966061
1989856
Adjusted assets
1986050
1945539
1966061
1989856
0
0
0
0
2056872
2015987
2027196
2053487
N.M.
N.M.
N.M.
N.M.
2069555
2029333
2039671
2067474
-83505
-83794
-73610
-77618
N.M.
N.M.
N.M.
N.M.
106721
118596
126716
133973
Preprovision operating income
9533
19652
20721
14372
Credit loss provisions (net new)
Liabilities (category name - no data)
Total deposits
Other borrowings^
Other liabilities
Total Liabilities^
Equity (category name - no data)
Total equity^
Common shareholders' equity (reported)
Other items
Nonperforming assets
-2665
58
-2465
1890
Net income before extraordinaries
6376
7690
48668
10982
Extraordinary income
N.M.
N.M.
N.M.
N.M.
*All figures as reported in Form 10-K for the applicable year, unless otherwise specified.
**Allowance for loan losses.
***Measures growth in gross customer loans.
^We treat Freddie Mac's preferred shares as liabilities, as we do not expect these to be sufficiently loss-absorbing to qualify for our measure of equity.
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
87
Summary Analysis
Housing Financing Fund
Ibudalanasjodur (HFF)
Ratings:
BB/Stable/B
Rationale
SACP:
b
Our ratings on Iceland's HFF reflect our view that
HFF's stand-alone credit profile (SACP) remains
at 'b' and that the likelihood of extraordinary
government support remains high.
On Jan. 15, 2016, we raised our long-term ratings
on Iceland to 'BBB+'. Even though we expect an
improving trend for the operating environment
for banks in Iceland, we do not expect that
HFF's SACP will improve to above 'b-' over the
next 12 months. This is because we anticipate
the institution’s capital position will remain
very weak, with the government only providing
enough capital to run-off the institution in an
orderly fashion. In addition, we believe that HFF
continues to experience revenue problems, with
a high share of prepayments resulting in very low
operating profits and limiting any meaningful
capital generation. While we see the risks in
its loan book decreasing in line with strong
economic growth in Iceland, nonperforming
assets (based on our definition) remain relatively
high at double those of the system as of June 30,
2015. We expect loan loss provisions will be small
for the next 12-24 months and have little impact
on HFF's income.
We rate HFF under our criteria for governmentrelated entities. We believe that HFF has an
important role for and an integral link with the
Icelandic government. Consequently, we believe
there is a high likelihood that the government
would provide extraordinary support to the
institution if needed.
We see HFF as having an important role for
the government of Iceland, primarily based on
the consequences for the government and the
domestic capital market of a default by HFF.
HFF's outstanding bonds amount to about
30% of Iceland's GDP and nearly 80% is held
88
Central Government Agencies 2016 | September 2016
by Icelandic pension funds. A default could
therefore entail losses for the pension funds; we
do not believe the government would view this as
politically acceptable. HFF's default could also
undermine confidence in other companies that
benefit from similar government guarantees.
We also regard HFF's link with the government as
integral and we believe it will remain 100% stateowned. As a state agency, HFF is not subject
to bankruptcy proceedings and is exempt from
taxation. The government provided support to
HFF through capital injections three times during
2010-2014, contributing a total of more than
Icelandic krona 50 billion. The government also
provides an ultimate, but not timely, guarantee
on HFF's outstanding debt.
At present, HFF's future role and operations
remain highly uncertain. As we have previously
stated, we expect a gradual and orderly
disbanding of the institution over several years.
We anticipate HFF's new lending will remain
minimal and the institution's loan portfolio
will continue to contract. At present, we do not
expect to change our assessment of HFF's role
for or link with the government.
Outlook
The stable outlook reflects our expectation that
HFF's SACP will remain unchanged, and that the
likelihood of the government of Iceland providing
timely and sufficient extraordinary support to
HFF in the event of financial distress remains
high. We do not expect to take a rating action
on HFF if we raise or lower our long-term local
currency sovereign credit rating on Iceland by
one notch, all else being equal.
Last Ratings Action
And Date
Ratings raised on
Jul. 21, 2016
LOS:
High
Role:
Important
Link:
Integral
Key Policy Role:
To act as Iceland's key
residential mortgage
lender and organizer
of housing affairs.
Issuer Website:
www.ils.is/hff/
Primary Credit
Analyst:
Maxim Rybnikov
London
(44) 20-7176-7125
maxim.rybnikov@
spglobal.com
Secondary Credit
Analyst:
Sean Cotton
Stockholm
(46) 8-440-5928
sean.cotten@
spglobal.com
Ratings At End June
2015:
BB-/Stable/B
Ratings At End June
2008:
A/Negative/A-1
We could lower the ratings if we concluded
that the effects of a potential HFF default for
the government and the capital markets had
spglobal.com/ratings
Summary Analysis
reduced, which would reduce the incentive
for the government to provide timely and
extraordinary support to the institution. This
could occur, for instance, if the volume of HFF's
outstanding bonds declined markedly.
We could raise the ratings if we believed that the
risks inherent in unwinding the mortgage portfolio
had reduced substantially, for instance based on
improved asset quality and resilient pre-provision
earnings generation.
HFF (Housing financing fund): Selected Indicators
Period
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
ISK
ISK
ISK
ISK
ISK
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
5.5
4.5
3.4
3.2
2.3
Leverage ratio (%)
2.4
2.2
1.7
1.7
1.1
Total adjusted capital/adjusted assets (%)
2.4
2.2
1.7
1.7
1.1
Net nonperforming assets/customer loans + other real estate owned (%)
13.6
15.3
19.4
20.0
16.5
Net interest income/operating revenues (%)
82.5
67.4
66.6
68.8
79.6
0.1
-0.2
-0.5
-0.9
0.1
Core earnings/operating revenues (%)
55.3
-53.9
-98.4
-217.4
28.7
Loan loss reserves/gross nonperforming assets (%)
15.1
15.5
12.5
12.6
14.1
Growth in customer loans (%)
-11.4
-5.3
-1.4
-0.2
2.7
Growth in loss reserves (%)
-23.6
-5.8
-3.7
6.9
-30.3
-2.5
-4.4
-1.5
1.4
3.4
-168.6
-72.9
-35.4
3141.7
-99.2
107.2
98.0
94.9
95.8
N/A
Core earnings/ Adjusted assets (%)
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
8.8
8.3
9.5
9.1
9.4
100.0
100.0
100.0
100.0
100.0
8.8
8.3
9.5
9.1
9.4
spglobal.com/ratings
89
Summary Analysis
HFF (Housing financing fund): Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
ISK
ISK
ISK
ISK
ISK
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
13237
17524
7916
10767
13075
102515
30343
32294
27905
33495
5062
7622
11055
13946
11003
664118
749209
790919
802407
803855
16149
21128
22438
23312
21802
Customer loans (net)
647969
728081
768481
779095
782053
Earning assets
771695
787174
834268
844258
848353
Period
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Equity interests/participations (nonfinancial)
All other assets
0
0
10
0
0
29313
36261
38470
31132
24127
Total assets
804274
824656
862947
876064
863971
Adjusted assets
804073
824485
862796
875916
863831
0
0
0
0
0
782558
802419
838737
854253
854168
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
1878
4150
9365
7111
248
Total Liabilities
784436
806569
848102
861364
854416
Total equity
19838
18087
14845
14699
9555
Common shareholders' equity (reported)
19838
18087
14845
14699
9555
106744
136456
178877
184861
154189
104
251
1334
950
1258
-1059
1544
5688
8806
272
1827
3242
-4354
-7856
986
0
0
0
0
0
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
90
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Hrvatska banka za obnovu i razvitak
(HBOR)
Ratings:
BB/Negative/B
Rationale
SACP:
N/A
We equalize the ratings on HBOR with those
on Croatia. We assess that the sovereign is
almost certain to provide timely and sufficient
extraordinary support to HBOR in the event of
financial distress. We do not consider the almost
certain likelihood of support to be subject to
transition risk. We base our assessment of HBOR
on our view of the bank's:
––Critical public policy role as the main operator of
the government's economic, social, and political
policy--namely, the sustainable development
of the Croatian economy and the promotion
of exports. The bank's role has widened since
its formation and has evolved alongside the
government's strategic goals for the social
and economic development of the country.
Since 2015, HBOR has officially been in charge
of coordinating the implementation of the
investment plan for Europe in cooperation with
the European Investment Bank and the European
Investment Fund; and
––Integral link with Croatia, demonstrated by the
state's 100% ownership, regular oversight, and
injections of capital. HBOR benefits from a public
policy mandate and strong government support.
Croatia guarantees all of HBOR's obligations
unconditionally, irrevocably, and on first demand,
without issuing a separate guarantee instrument
as stipulated by the HBOR Act. The government
is closely involved in defining HBOR's strategy;
the supervisory board includes the ministers of
finance and economy--who serve as president
and vice president of the board--as well as the
ministers of regional development and EU funds,
agriculture, tourism, and entrepreneurship and
crafts. Lastly, the government is continuing its
capital injections, with the stated goal of HBOR
reaching total capital of Croatian kuna (HRK) 7
billion over the next several years.
Central Government Agencies 2016 | September 2016
Last Ratings Action
And Date
Ratings affirmed on
Jul. 19, 2016
HBOR's creditworthiness is linked to that of the
sovereign. Contrary to our previous reviews, we
no longer assess a stand-alone credit profile
for HBOR because we view the likelihood of
extraordinary government support for the
bank as almost certain. However, we estimate
that the bank's underlying credit quality,
absent extraordinary support, is in the 'bb'
category. This combines our view of the bank's
strong capitalization and the sustainability of
its business model as a government-owned
development bank and export credit agency and,
as such, we do not consider government support
to be subject to transition risk.
Positively, HBOR has a relatively stable track
record of revenue generation and profitability,
which supports internal capital generation.
HBOR's capital adequacy ratio stood at over
73% in December 2015, well above the minimum
capital requirement for Croatian banks. This is
set against a tougher operating environment,
in which the bank is exposed to the economic
cycle and is susceptible to higher-thanaverage credit losses due to a fast-growing and
changing loan book portfolio. The bank also
exhibits significant, though reduced, singlename concentrations. As a result of commercial
banks' reduced willingness to lend to the private
sector, HBOR's share of direct lending in newly
approved loans increased to 57% in 2015, from
37% the year before. The bank continues to rely
on concentrated wholesale funding, especially
from multilateral institutions. At the same time,
the bank benefits from a sizable liquid asset
portfolio and an unconditional, irrevocable and
at first demand guarantee from the Republic of
Croatia, which is embedded in law.
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To act as the main
operator of the
reconstruction and
development of the
Croation econonmy
and the promotion of
exports.
Issuer Website:
www.hbor.hr
Primary Credit
Analyst:
Felix Winnekens
Frankfurt
(49) 69-33-999-245
felix.winnekens@
spglobal.com
Secondary Credit
Analyst:
Ludwig Heinz
Frankfurt
(49) 69-33-999-246
ludwig.heinz@
spglobal.com
Ratings At End June
2015:
BB/Negative/B
Ratings At End June
2008:
BBB/Stable/A-3 (FC)
HBOR's role in facilitating EU funds absorption
has been crucial, especially for small and
midsize enterprises (SMEs). In fact, HBOR has
spglobal.com/ratings
91
Summary Analysis
significantly intensified its role in funding SMEs.
In 2015, 94% of total loans approved were to
SMEs, increasing the share of the loan portfolio
to this sector to 41%. In light of the government's
economic agenda, we believe that HBOR will
continue to play a vital role as demonstrated
by the state's continued capital injections and
growth in new lending. In 2015, the Croatian
government injected HRK32.9 million, increasing
the total amount of capital contributed by the
states to HRK6.5 billion, or 67% of total equity at
end-2015. The Croatian government is planning a
further HRK500 million capital injection over the
next couple of years at roughly the same pace as
last year. The year 2015 was also marked by a hike
in direct lending, as the share of directly approved
new loans increased to more than half, that is 57%
from an average of 34% over 2010-2014.
Outlook
The negative outlook on HBOR reflects that on
Croatia. Because we equalize the ratings on HBOR
with those on Croatia, we would lower the ratings
on HBOR if we lowered our sovereign credit ratings
on Croatia. In addition, we could lower the ratings
on HBOR if we revised our view of the likelihood
of sufficient and timely extraordinary support
from the Republic of Croatia, for example if we
considered that the bank's role for or link to the
Croatian government had weakened. A revision of
our outlook on Croatia to stable would trigger the
same action on HBOR.
Hrvatska banka za obnovu i razvitak: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
HRK
HRK
HRK
HRK
HRK
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
71.2
79.2
75.4
67.6
61.3
Leverage ratio (%)
37.8
36.6
34.0
31.5
33.3
Total adjusted capital/adjusted assets (%)
37.8
36.6
34.0
31.5
33.3
Period
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
Growth in loss reserves (%)
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
-14.2
-3.6
2.8
4.3
6.0
88.4
95.3
93.2
96.1
85.0
0.8
0.7
0.7
0.5
0.7
45.6
38.9
40.5
31.3
37.4
210.0
114.4
89.6
86.9
82.2
10.0
6.1
16.3
9.2
6.9
7.5
23.0
0.7
12.0
7.5
-0.9
-1.5
1.6
17.0
-4.0
0.8
-29.7
-16.7
21.6
32.3
120.0
133.1
127.7
144.8
123.6
Short-term wholesale funding/total wholesale funding (%)
14.5
7.0
15.4
4.4
21.6
Total wholesale funding / funding base (%)
98.6
98.8
99.0
99.0
98.9
Short-term wholesale funding/funding base (%)
14.3
6.9
15.2
4.3
21.4
92
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Hrvatska banka za obnovu i razvitak: Summary Balance Sheet
Period
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
HRK
HRK
HRK
HRK
HRK
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
842
1359
2371
2914
335
2851
2484
1532
1275
1072
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
12523
13498
14037
14749
14300
Customer loans (gross)
11728
10659
10042
8638
7908
Loan loss reserves
2505
2347
1943
1929
1723
Customer loans (net)
9223
8312
8099
6708
6185
28309
28503
26765
25513
24260
0
0
0
0
0
Earning assets
Equity interests/participations (nonfinancial)
All other assets
25
39
46
37
37
Total assets
25553
25786
26168
25767
22013
Adjusted assets
25548
25783
26165
25764
22011
237
183
167
167
154
Liabilities (category name - no data)
Total deposits
14845
15214
16000
16405
13342
Other liabilities
Other borrowings
744
916
1113
1084
1176
Total Liabilities
15888
16355
17280
17656
14672
Equity (category name - no data)
Total equity
9665
9431
8888
8111
7341
Common shareholders' equity (reported)
9665
9431
8888
8111
7323
1193
2051
2169
2221
2096
312
274
338
312
293
Credit loss provisions (net new)
105
104
148
177
146
Net income before extraordinaries
206
169
189
134
148
0
0
0
0
0
Other items
Nonperforming assets
Preprovision operating income
Extraordinary income
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
93
Summary Analysis
India Infrastructure Finance Co. (IIFCL)
Rationale
The rating on IIFCL reflects the company's
position as the key agency of the government
of India for facilitating the long-term financing
of the country's infrastructure projects. It also
reflects our opinion that there is an almost
certain likelihood that the Indian government will
provide timely extraordinary support to IIFCL,
sufficient to meet its debt obligations, in case of
financial distress. We have therefore equalized
our rating on IIFCL with the sovereign credit
rating.
In accordance with our criteria for rating
government-related entities, the almost certain
likelihood is based on our view of IIFCL's:
––Critical role as the entity responsible for
providing long-term financing for viable
infrastructure projects. This is the key factor
in supporting India's economic development,
given the country's size, openness, and trade
dependence; and
––Integral link with the Indian government through
100% sovereign ownership, government
appointments to the board of directors,
strategies, and borrowing through operational
and financial performance targets. The
sovereign also provides sovereign guarantees,
capital injections, and the ability to issue
tax-free bonds. The remuneration of IIFCL's
employees is determined in accordance with
civil service protocols, and India's auditor
general is responsible for auditing IIFCL's annual
accounts, which are then presented to the
parliament.
IIFCL's policy role and operating conditions
are spelt out in the Scheme for Financing of
Infrastructure through India Infrastructure
Finance Co. Ltd. (SIFTI). IIFCL's loans cannot
exceed 20% of the total project costs and the
company can only fund commercially viable
94
Central Government Agencies 2016 | September 2016
projects. We believe that IIFCL's activities signal
the critical role the government sees IIFCL as
providing in helping to achieve faster financial
closure for infrastructure projects.
We believe the remaining uncertainties on IIFCL's
start-up nature and the long-term viability of its
public policy mandate temper these strengths.
This reflects our view that IIFCL's role could
diminish once the Indian capital markets mature
and become more conducive to raising long-term
capital for infrastructure projects. This could
result in the government reviewing, and even
potentially withdrawing, the guarantees and the
SIFTI scheme. These facilities are to be reviewed
every five years, or earlier if required.
IIFCL's integral links to the central government is
evident from the company's status as the first and
only institution that is allowed to tap the country's
foreign exchange reserves. The Reserve Bank of
India can lend up to US$5 billion to IIFCL (U.K.)
with a government guarantee. These funds are
then lent to Indian infrastructure companies for
importing capital goods for projects in India.
Currently, the government guarantees almost all
of IIFCL's borrowings. The maximum amount of
guarantees that IIFCL can draw on depends on
its funding requirements, after consultation with
the Ministry of Finance at the beginning of each
fiscal year. The government has also consistently
injected capital into the company since its
inception. For the fiscal year ended March 31,
2015, the government injected capital of Indian
rupee (INR) 6 billion into IIFCL, taking the total
paid-up capital to INR39 billion.
Ratings:
BBB-/Stable/A-3
Last Ratings Action
And Date
Ratings affirmed on
Dec. 09, 2015
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To act as a key
government agency
for financing
infrastructure
projects in India.
Issuer Website:
www.iifcl.org
Primary Credit
Analyst:
Rebecca Hrvatin
Melbourne
(61) 3 9631 2244
rebecca.hrvatin@
spglobal.com
Secondary Credit
Analyst:
Kyran A Curry
Singapore
(65) 6239-6342
kyran.curry@
spglobal.com
Ratings At End June
2015:
BBB-/Stable/A-3
Ratings At End June
2008:
BBB-/Stable/--
IIFCL's loan portfolio has a concentrated exposure
to the infrastructure sector and the loan book
is prone to seasoning because of the company's
limited history. IIFCL's profitability has improved,
with the return on average assets rising to 1.9%
for fiscal 2015 from 1.4% in 2014, due to an
spglobal.com/ratings
Summary Analysis
improvement in net interest margins. We expect
asset quality to remain a key variable that will
affect profitability.
We believe that it is no longer meaningful to
determine a stand-alone credit profile (SACP)
for IIFCL, whereas we previously assessed the
indicative SACP at 'b'. In our view, it is difficult
to differentiate between IIFCL and the Indian
government, since in substance the government
directly supports and encompasses IIFC's
business risk and financial risk profiles. This is
based on our observation that IIFCL essentially
acts as an arm of the government.
Outlook
The stable outlook on IIFCL reflects the outlook
on the sovereign rating on India. The equalization
takes into account our expectation that
IIFCL's strategic role as a policy instrument to
promote infrastructure financing will continue
over the next 12-24 months at least.
Any signs of change in IIFCL's policy role, a
reduction in government support, or a move to
materially reduce the government's stake in
IIFCL could erode the government's obligation
or incentive to provide extraordinary support to
the company.
We could lower the ratings if signs of IIFCL's
weakening link to the government emerge,
such as a material change in the company's
role and removal of the guarantee facility,
due to replacement, modification, or
discontinuation of the SIFTI scheme.
India Infrastructure Finance Co. Ltd.: Selected Indicators
Period
Year to Mar. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
INR
INR
INR
INR
INR
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Debt/equity (x)
5.9
6.3
6.8
7.0
8.3
Total adjusted capital/adjusted assets (%)
N/A
N/A
N/A
N/A
N/A
Net nonperforming assets/customer loans + other real estate owned (%)
N/A
N/A
N/A
N/A
N/A
98.2
106.6
98.4
96.7
88.0
Net interest income/operating revenues (%)
Core earnings/average assets (%)
Core earnings/operating revenues (%)
1.9
1.5
2.8
2.4
1.4
N/A
N/A
N/A
N/A
N/A
Loan loss reserves/gross nonperforming assets (%)
N/A
N/A
N/A
N/A
N/A
Growth in customer loans (%)
N/A
N/A
N/A
N/A
N/A
Growth in loss reserves (%)
N/A
N/A
N/A
N/A
N/A
% Change in assets (YoY)
14.2
14.0
28.5
25.0
13.8
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
N/A
N/A
N/A
N/A
N/A
129.9
19.5
17.5
18.0
15.0
Short-term wholesale funding/total wholesale funding (%)
N/A
N/A
N/A
N/A
N/A
Total wholesale funding / funding base (%)
N/A
N/A
N/A
N/A
N/A
Short-term wholesale funding/funding base (%)
N/A
N/A
N/A
N/A
N/A
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
95
Summary Analysis
India Infrastructure Finance Co. Ltd.: Summary Balance Sheet
Year to Mar. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
INR
INR
INR
INR
INR
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
144411
146586
116689
99634
75579
5381
4463
2990
3086
20364
N/A
N/A
N/A
N/A
N/A
364402
306867
282380
208320
154135
N/A
N/A
N/A
N/A
N/A
374879
307115
282597
208431
154235
25
26
13
12
8
Period
Assets
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Net receivables
Fixed assets
Equity interests/participations (nonfinancial)
N/A
N/A
N/A
N/A
N/A
All other assets
N/A
N/A
N/A
N/A
N/A
529854
463822
406702
316518
253246
529848
463813
406701
316517
253246
Total assets
Adjusted assets
Liabilities
Total deposits
Total Debt
0
0
0
0
0
436844
386576
346598
271169
221704
Other liabilities
19077
15421
9237
6333
4838
Total Liabilities
455920
401997
355834
277502
226542
73934
61825
50868
39016
26704
73934
61825
50868
39016
26704
Equity
Total equity
Common shareholders' equity (reported)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
96
Central Government Agencies 2016 | September 2016
N/A
N/A
N/A
N/A
N/A
15749
14508
15613
10441
4918
1425
3482
430
517
N/A
14324
11026
15184
9923
4918
N/A
N/A
N/A
N/A
N/A
spglobal.com/ratings
Summary Analysis
Industrial Bank of Korea (IBK)
Ratings:
AA-/Stable/A-1+
Rationale
Last Ratings Action
And Date
Ratings raised on
Aug. 8, 2016
Our ratings on IBK reflect the bank's extremely
high likelihood of receiving support from
the government of the Republic of Korea, its
strong position in lending to small and midsize
enterprises (SMEs), and relatively low exposure
to construction and real-estate development
projects. However, the ratings are constrained by
IBK's highly concentrated loan portfolio in SMEs
and relatively weak retail deposit base compared
with its domestic peers'. The ratings also reflect
our anchor for rating banks operating in Korea, as
well as IBK's overall adequate business position,
adequate capital and earnings, adequate risk
position, below average funding, and adequate
liquidity.
Our opinion that there is an extremely high
likelihood of the Korean government providing
timely and sufficient extraordinary support to IBK
in the event of financial distress stems from our
assessment of IBK's:
––Critical role for the Korean government in
providing significant support to the SME sector
as the largest SME lender in Korea. We also
expect IBK to play a critical role in supporting
SMEs especially during economic downturns,
noting that the bank provided about 90% of
new SME loans during the global financial crisis
in 2008-2009. The current administration has
been emphasizing the need for SME support to
sustain economic prosperity, which suggests
that IBK will be more active in supporting SMEs;
and
––Very strong link with the Korean government,
which directly and indirectly owns about 55%
of IBK, and in our view, will likely maintain a
controlling stake in IBK in the future. Under
the IBK Act, the bank is obliged to provide at
least 70% of its loans to SMEs. In addition,
the act requires the government to replenish
IBK's capital reserves to the extent that they
Central Government Agencies 2016 | September 2016
are depleted by annual losses. The Korean
government's strong willingness to support
IBK was reiterated by capital injections worth
Korean won (KWR) 1.33 trillion in 2008-2010
and additional contributions of KWR126 billion
in 2013-2015, aimed mainly at supporting
SMEs experiencing difficulties amid Korea's
economic slowdown.
SACP:
bbb
LOS:
Extremely High
Role:
Critical
Link:
Very Strong
Overall, we believe IBK's business position will
remain adequate. IBK has a strong market share
of about 22% in SME lending (2015), and it is
the sixth-largest bank in the Korean market
with about 8% market share in terms of assets.
We expect the bank to maintain its long-term
relationships with key customers and developed
risk management skills in the SME segment.
However, we think that the bank's overall
asset quality could be weaker and less stable
than that of the top Korean banks, reflecting
the volatile credit quality of SMEs because of
their vulnerability to economic cycles. IBK has
also seen relatively significant increases in its
SME loans in past economic downturns, but
its earnings performance and asset quality
measures, especially the nonperforming loan
(NPL) ratio, have been relatively stable compared
with domestic peers' in recent years.
Key Policy Role:
To provide financial
support for small and
midsize enterpises in
Korea.
Issuer Website:
www.eng.ibk.co.kr
Primary Credit
Analyst:
HongTaik Chung
Hong Kong
(852) 2533-3597
hongtaik.chung@
spglobal.com
Secondary Credit
Analyst:
Daehyun Kim
Hong Kong
(852) 2533-3508
daehyun.kim@
spglobal.com
We believe IBK will likely generate stable earnings
with moderate loan growth. We also think that IBK
will continue to gradually strengthen its capital
base given its relatively low regulatory capital
ratios compared with the domestic peer average.
Ratings At End June
2015:
A+/Stable/A-1
Ratings At End June
2008:
A/Stable/A-1
Despite a countercyclical SME loan-expansion
strategy, we expect IBK's underwriting standards
to remain largely in line with those of its peers.
For example, IBK's NPL ratio was about 1.35%
at the end of June 2015 compared with the
domestic peer average of 1.50%. IBK also has
relatively limited exposure to the real estate and
construction sectors, including real-estate project
financing loans, as well as large shipbuilding
spglobal.com/ratings
97
Summary Analysis
and shipping sectors, whose asset quality has
been under relatively significant pressure and has
weighed on its domestic peers' performance.
In our view, IBK's funding capability from deposits
is slightly weaker than that of its domestic peers
due to its relatively underdeveloped retail franchise
and fewer household customers. The bank's
dependence on customer deposits is below the
average of about 85% of total deposits for domestic
major commercial banks, but we note that the ratio
has gradually risen from about 50% at the end of
2008. However, in our opinion, IBK's policy role and
government support measures, which have given
the bank good access to domestic and international
capital markets, support its liquidity position to a
certain extent.
Outlook
The stable outlook on IBK reflects the outlook on
the sovereign ratings on Korea. The stable outlook
on the long-term sovereign ratings reflects our
expectation that Korea's credit metrics will
remain broadly unchanged over the next two
years. The ratings on IBK will move in tandem
with the sovereign ratings because of its status
as a government-related entity with an extremely
high likelihood of receiving extraordinary support
from the Korean government.
We could downgrade IBK if we lower the sovereign
ratings. In our view, the sovereign ratings could
come under downward pressure if geopolitical
tensions related to North Korea escalate to a
point that leads to long-term damage to the
South Korean sovereign's credit metrics.
Conversely, we could upgrade IBK if we raise the
sovereign ratings. We could raise the sovereign
ratings if the Korean economy continues to
expand significantly faster than our current
expectations suggest, resulting in further
improvements to its economic prosperity and
resilience.
Industrial Bank of Korea: Selected Indicators
Period
Currency
Denomination
Tier 1 capital ratio (%)
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
KRW
KRW
KRW
KRW
Mil.
Mil.
Mil.
Mil.
9.4
9.0
9.0
8.9
Leverage ratio (%)
5.9
6.0
5.8
6.1
Total adjusted capital/adjusted assets (%)
6.0
6.2
6.0
6.3
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
0.0
0.0
-0.1
0.0
96.5
98.1
95.5
96.2
0.5
0.5
0.4
0.6
Core earnings/operating revenues (%)
24.8
21.6
18.7
24.2
Loan loss reserves/gross nonperforming assets (%)
98.9
102.8
106.6
99.3
Growth in customer loans (%)
9.5
7.7
4.9
3.2
Growth in loss reserves (%)
6.2
4.3
2.3
-12.0
Growth in adjusted assets (%)
9.2
3.3
7.5
6.3
-0.6
-3.6
5.0
-15.3
Stable funding ratio (%)
58.1
58.7
62.5
63.6
Short-term wholesale funding/total wholesale funding (%)
75.9
76.9
72.3
70.6
YoY growth in loan loss provisions (%)
Total wholesale funding / funding base (%)
59.3
59.6
60.4
59.3
Short-term wholesale funding/funding base (%)
45.0
45.8
43.7
41.9
98
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Industrial Bank of Korea: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
KRW
KRW
KRW
KRW
Mil.
Mil.
Mil.
Mil.
Assets (category name - no data)
Cash and money market instruments
10018316
9947143
12822044
7377567
Securities
36860069
34561904
34756488
32937421
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
0
0
0
0
185143554
169044579
156954222
149566450
2509092
2363203
2265939
2214431
Customer loans (net)
182634462
166681376
154688283
147352019
Earning assets
222003623
203606483
191710710
182503871
0
0
0
79763
Equity interests/participations (nonfinancial)
5317628
3653762
5252371
4443996
Total assets
All other assets
239842781
219760786
212582797
197743593
Adjusted assets
239540262
219423557
212335316
197583515
95284755
85428947
80846495
75840050
Liabilities (category name - no data)
Total deposits
Other borrowings
111870788
104704569
102430059
93939635
Other liabilities
12368138
10849268
11296600
11175555
Total Liabilities
223948191
204914527
198953739
184426023
Total equity
15894590
14846259
13629058
13317570
Common shareholders' equity (reported)
15313969
14272430
13060072
12753827
Nonperforming assets
2536831
2299531
2126624
2230270
Preprovision operating income
2756366
2556262
2401652
2720701
Credit loss provisions (net new)
1201642
1209022
1254105
1194105
Net income before extraordinaries
1142983
1026598
848492
1167091
0
0
0
0
Equity (category name - no data)
Other items
Extraordinary income
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
99
Summary Analysis
Instituto de Crédito Oficial (ICO)
Rationale
We equalize our long-term rating on ICO with that
on Spain. This reflects our opinion that there is
an almost certain likelihood that the Spanish
government would provide timely and sufficient
extraordinary support to ICO in the event of
financial distress.
We consider ICO to be a government-related entity
(GRE). In accordance with our criteria for GREs, our
view of an almost certain likelihood of ICO receiving
timely and sufficient extraordinary support from
the Spanish government stems from our view of
ICO's:
––Integral link with the Spanish government.
Endowed with a special public status, ICO
essentially functions, in our view, as a financial
extension of the central government. In turn, the
government has historically granted ICO strong
support in the form of a wide direct, irrevocable,
and unconditional guarantee covering all of ICO's
debt; and
––Critical role as an entity created especially
to carry out key financial aspects of national
economic policies on behalf of the Spanish
government.
ICO's activities currently span four main areas:
––Provision of long-term project-specific financing
to strategic sectors. ICO provides financial
backing to small and midsize enterprises
(SMEs); grants loans for finance energy,
infrastructure, transportation, technology,
communications, and environmental projects;
and funds internationalization projects of
Spanish companies. It also financially supports
initiatives to develop less wealthy regions, create
employment, and modernize Spain's industrial
and services sectors.
100
Central Government Agencies 2016 | September 2016
Ratings:
BBB+/Stable/A-2
Last Ratings Action
And Date
Ratings affirmed on
Oct. 26, 2015
––Granting of special financial facilities in economic
crises. The government has requested ICO to
provide financial support, for example, to Spanish SACP:
N/A
local and regional governments.
––Provision of special financial support. The
government uses ICO to provide financial backing
in special situations that it deems important
enough for government involvement, such as
sector-specific crises or natural disasters. The
government endows ICO with the necessary
budgetary resources for this purpose.
––Management of specific government funds.
ICO acts solely as a financial intermediary,
channeling government-owned funds, in export
credit support, bilateral development funds, and
microcredit to developing countries. These loans
are recorded separately from ICO's accounts.
ICO's role was reinforced in 2012, when Spain's
central government set up mechanisms to support
the liquidity of local and regional governments.
In this regard, ICO plays a key role as a payment
agent of the liquidity facility "Fondo de Liquidez
Autonómico" designed to cover the regions'
maturing debt and budgetary deficits.
In contrast with that of commercial banks, ICO's
strategy is not to maximize profit, but to fulfill
its public service mandate. Consequently, its
profitability remains low, although positive. In
recent years, ICO has improved its capitalization
through deleveraging and capital injections from
the central government, improving its solvency
ratio. We view ICO's liquidity management as
conservative. The entity benefits from a sizeable
buffer of liquid securities. Moreover, assets and
liabilities maturing in less than one year are
broadly matched. Furthermore, ICO's relatively
high reliance on European Central Bank funding
is expected to decline gradually as the institution
further deleverages its balance sheet.
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To provide financial
backing for small
and midsize Spanish
enterprises.
Issuer Website:
www.ico.es
Primary Credit
Analyst:
Alejandro Rodriguez
Anglada
Madrid
(34) 91-788-7233
alejandro.rodriguez.
anglada@spglobal.
com
Secondary Credit
Analyst:
Antonio Rizzo
Madrid
(34) 91-788-7205
antonio.rizzo@
spblobal.com
Ratings At End June
2015:
BBB+/Stable/A-2
Ratings At End June
2008:
AAA/Stable/A-1+
spglobal.com/ratings
Summary Analysis
ICO is wholesale funded, since according to its
bylaws it cannot collect deposits. Therefore,
domestic and international capital markets and
multilateral institutions are the main providers
of funding to ICO. In our view, ICO enjoys wide
access to capital market funding, and has
benefited from it even in difficult times. The fact
that ICO's debt benefits from a direct, explicit,
irrevocable, and unconditional guarantee from
Spain contributes to its access to capital market
funding, in our opinion.
ICO's activity is focused on Spain. The
government appoints ICO's CEO, and oversees
all of its activities through the entity's general
council. We understand that legal reforms
enacted on Oct. 2, 2015, will lead to the addition
of independent members to ICO's board, following
the EU's recommendations on good governance
of similar institutions. In our view, these reforms
are unlikely to weaken the government's ability to
control ICO and direct its strategy. Furthermore,
ICO benefits from the guarantee of the Spanish
government, and as such its debt is treated as a
sovereign exposure from a fiscal and regulatory
perspective.
Outlook
The stable outlook on ICO mirrors that on Spain.
We could lower the ratings on ICO independently
of any rating action on the sovereign. This
could occur if we considered that ICO's role
for and link with the Spanish government had
weakened, indicating a lower likelihood of
extraordinary government support. We might
take this view if the central government were
to change ICO's special public status, withdraw
capital from ICO, or stop guaranteeing ICO's
debt. However, we currently see these scenarios
as very unlikely. If we took a positive rating
action on Spain, we would take a similar action
on ICO, assuming that we continued to have
the same opinion on ICO's critical role for and
integral link with Spain's government.
Instituto de Crédito Oficial: Selected Indicators
Period
Currency
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
32.2
23.3
18.5
13.4
12.2
8.7
6.0
4.5
3.6
3.9
Leverage ratio (%)
Total adjusted capital/adjusted assets (%)
8.5
5.9
4.4
3.5
3.7
Net nonperforming assets/customer loans + other real estate owned (%)
-1.1
-1.1
-0.6
-0.3
-0.4
120.0
102.9
88.0
94.2
90.6
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
0.1
0.2
0.2
0.1
0.2
72.9
24.9
18.9
16.3
34.4
Loan loss reserves/gross nonperforming assets (%)
126.1
133.3
124.2
122.5
140.9
Growth in customer loans (%)
-26.4
-16.7
-19.8
11.5
19.5
Core earnings/operating revenues (%)
Growth in loss reserves (%)
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
-8.6
12.2
36.7
64.0
20.7
-26.0
-17.8
-11.3
21.8
21.5
-104.9
-40.5
-1.6
162.6
87.8
125.0
120.3
102.7
100.7
117.9
Short-term wholesale funding/total wholesale funding (%)
23.7
28.3
36.3
32.8
12.9
Total wholesale funding / funding base (%)
98.1
96.3
98.0
92.4
87.0
Short-term wholesale funding/funding base (%)
23.2
27.2
35.6
30.3
11.2
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
101
Summary Analysis
Instituto de Crédito Oficial: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
1031
1851
2458
4495
1736
17550
22813
28634
19642
8439
0
0
0
0
0
43469
59069
70942
88503
79388
2202
2409
2148
1571
958
Customer loans (net)
41267
56660
68794
86932
78430
Earning assets
61018
83215
101325
111284
88057
Period
Currency
Denomination
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Equity interests/participations (nonfinancial)
56
54
53
52
50
251
268
254
168
169
Total assets
62185
84009
102220
115248
94595
Adjusted assets
62176
84001
102213
115240
94585
Total deposits
12690
20820
28537
33204
15737
Other borrowings
41835
55144
64745
72763
69113
All other assets
Liabilities (category name - no data)
Other liabilities
2318
3118
4447
5124
5736
Total Liabilities
56843
79082
97729
111091
90892
Total equity
5342
4927
4491
4157
3704
Common shareholders' equity (reported)
5342
4927
4491
4157
3704
Equity (category name - no data)
Other items
1746
1807
1729
1283
680
Preprovision operating income
63
544
806
782
446
Credit loss provisions (net new)
-18
355
597
607
231
34
81
79
64
47
0
0
0
0
0
Nonperforming assets
Net income before extraordinaries
Extraordinary income
102
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Japan Bank for
International Cooperation (JBIC)
Ratings:
A+/Stable/A-1
Rationale
SACP:
N/A
The ratings on JBIC are equalized with those on
Japan. This reflects our view that JBIC has an
almost certain likelihood of receiving extraordinary
support from the government in a time of need.
In addition, our ratings reflect the government's
existing strong support for JBIC in the form of
capital injections, low-cost direct funding for JBIC
through the Fiscal Investment and Loan Program,
and guarantees for JBIC's foreign-currency
funding.
JBIC plays a critical role for the Japanese
government. The bank's role reflects its policy
mandate to: extend financing to maintain and
improve the international competitiveness
of Japanese industries; develop and acquire
natural resources; and carry out international
finance operations that contribute to the
sound development of the Japanese and global
economies.
During the global financial crisis in 2008-2009,
JBIC, as a part of Japan Finance Corp. (JFC),
was one of the key public financial institutions
to provide liquidity in the market. Later, the
government spun off JBIC from JFC and
established JBIC as a stand-alone entity on April 1,
2012. JBIC continues to receive strong backup from
the government to provide financial assistance
on an international level to prevent financial
instability.
JBIC has an integral link with the Japanese
government because it currently receives strong
support under the terms of its establishment act
(the JBIC Act). The government established JBIC as
an incorporated company with paid-in capital and
it wholly owns the bank under the provisions of the
JBIC Act. The government has strong oversight over
JBIC's operations. For instance, the appointment
and removal of directors, executive officers, and
Central Government Agencies 2016 | September 2016
Last Ratings Action
And Date
Ratings affirmed on
Apr. 20, 2016
auditors of JBIC require the Minister of Finance's
authorization and JBIC's annual budget requires
approval from the National Diet. Also, the Japanese
government is JBIC's main creditor as its largest
provider of funds through loans and guarantees. The
government's direct loans to JBIC are subordinated
to JBIC's straight bonds. JBIC also enjoys privileges
such as exemption from corporate tax.
In recent years, JBIC has been expanding the scope
of its operations in investment financing to achieve
the following: secure a stable supply of resources
including energy resources, as well as facilitate
Japanese companies' mergers and acquisitions
and equity investments in foreign enterprises,
and support their expansion overseas. As of April
2016, the government is moving forward with an
amendment to the JBIC Act, which includes enabling
the bank to establish a special account and to
proactively supply loans and capital for projects
with higher risks to promote Japanese companies'
infrastructure businesses in overseas markets
such as those in Asia's emerging countries. The
amendment will also make it possible for JBIC to
borrow long-term funds in foreign currency from
other banks and lenders to meet significant demand
for local currency-denominated loans, especially
in developing countries. JBIC's assets have grown
primarily because it has expanded the scope of its
operations in investment financing, and we expect
this will continue.
An increase in JBIC's exposure to specific
sectors, as well as its provision of funds and new
financial products, may affect its stand-alone
creditworthiness, relationship with the government,
and policy role. Amid a slump in commodities
prices, we note that there is an increasingly
real risk of investments in resource and energy
businesses, particularly for general trading and
investment companies. Additionally, we expect
JBIC to see an increase in high-risk loans and
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To maintain and
improve international
competitiveness of
Japanese industries
and develop and
acquire natural
resources.
Issuer Website:
www.jbic.go.jp
Primary Credit
Analyst:
Miuki Onchi
Tokyo
(81) 3-4550-8340
miyuki.onchi@
spglobal.com
Secondary Credit
Analyst:
Kensuke Sugihara
Tokyo
(81) 3-4550-8475
kensuke.sugihara@
spglobal.com
Ratings At End June
2015:
AA-/Negative/A-1+
Ratings At End June
2008:
AA/Stable/A-1+
spglobal.com/ratings
103
Summary Analysis
investment transactions, in line with the Japanese
government's strategy to spur investments.
Accordingly, we view any possible impact on
JBIC's asset quality from these factors and its risk
management as key credit factors that require
close surveillance. However, we believe any
effects on JBIC's creditworthiness on a standalone basis will likely be limited at this point. We
also believe that these factors are unlikely to
weaken the relationship between JBIC and the
government or JBIC'S policy role.
JBIC has adequate liquidity, given our
assessment that it has an almost certain
likelihood of receiving extraordinary government
support. The Japanese government currently
provides funding support to JBIC through
loans and guarantees. We estimate that the
government funded about 76% of JBIC's
total debt, with another 21% consisting of
government-guaranteed bonds. For fiscal year
2016, JBIC will continue to have access to the
government's foreign currency reserves to fund
the bank's foreign-currency loans or investments,
as it did in previous years. We attribute this to a
funding scheme that the Japanese government
set up for domestic corporations to promote
foreign investments and to stabilize the foreign
currency exchange market. JBIC's funding plan
in fiscal 2016 incorporates about 39% of its
total funding needs (worth up to ¥800 billion)
to be supplied through the above scheme and
¥1.3 trillion (about 63% of its funding needs) in
government loans and guaranteed bonds.
Outlook
The stable outlook on JBIC reflects that on our
long-term sovereign credit ratings on Japan. We
will keep our ratings on JBIC equalized with our
ratings and outlook on Japan. We may change
our rating on JBIC if JBIC's critical role within the
public policy framework or its integral link with
the government changes in any way. However, we
currently believe this is unlikely.
Japan Bank for International Cooperation: Selected Indicators
Period
Currency
Denomination
Year to March
2015
2014
2013
2012
Annual
Annual
Annual
Annual
¥
¥
¥
¥
Bil.
Bil.
Bil.
Bil.
Tier 1 capital ratio (%)
14.2
17.7
19.7
23.3
Leverage ratio (%)
15.0
16.4
18.7
22.2
Total adjusted capital/adjusted assets (%)
15.0
16.3
18.4
20.5
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
2.1
2.1
2.6
3.1
62.1
70.5
53.4
89.3
0.8
0.7
0.5
0.6
97.2
98.7
69.6
92.0
Loan loss reserves/gross nonperforming assets (%)
27.4
33.3
34.0
33.7
Growth in customer loans (%)
14.0
19.9
30.1
-3.2
Core earnings/operating revenues (%)
Growth in loss reserves (%)
-10.4
-7.2
11.8
-7.5
14.1
15.7
16.6
-0.2
YoY growth in loan loss provisions (%)
N.M.
-236.5
N.M.
N.M.
Stable funding ratio (%)
74.3
78.0
80.3
84.5
Short-term wholesale funding/total wholesale funding (%)
13.7
12.2
12.2
11.7
100.0
100.0
100.0
100.0
13.7
12.2
12.2
11.7
Growth in adjusted assets (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
104
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Japan Bank for International Cooperation: Summary Balance Sheet
Year to March
2015
2014
2013
2012
Annual
Annual
Annual
Annual
¥
¥
¥
¥
Bil.
Bil.
Bil.
Bil.
Cash and money market instruments
850
926
1123
1288
Securities
262
227
122
74
Period
Currency
Denomination
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
0
0
0
0
14433
12655
10555
8110
115
129
139
124
Customer loans (net)
14317
12527
10416
7986
Earning assets
15491
13702
11698
9473
0
0
0
0
Equity interests/participations (nonfinancial)
All other assets
2938
2526
2441
2379
Total assets
18464
16346
14430
12693
Adjusted assets
15888
13922
12028
10313
0
0
0
0
Liabilities (category name - no data)
Total deposits
Other borrowings
12475
11119
9451
7634
Other liabilities
3528
2886
2633
2764
Total Liabilities
16003
14005
12084
10398
Total equity
2461
2341
2347
2295
Common shareholders' equity (reported)
2461
2341
2347
2295
Nonperforming assets
421
387
409
369
Preprovision operating income
107
78
73
50
Credit loss provisions (net new)
-13
-14
10
-10
Net income before extraordinaries
126
91
64
53
0
0
0
0
Equity (category name - no data)
Other items
Extraordinary income
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
105
Summary Analysis
JSC Development Bank of
the Republic of Belarus (DBRB)
Rationale
We rate DBRB under our criteria for governmentrelated entities (GREs). We equalize our ratings
on DBRB with those on Belarus, based on our
assessment that there is an almost certain
likelihood that Belarus' government would
provide timely and extraordinary support
sufficient to service the bank's financial
obligations, if needed. This assessment is based
on our view of DBRB's:
––Integral link with the government,
demonstrated by the state's 100% ultimate
ownership, capital injections provided in the
past, and the government's legal responsibility
for all of the bank's bonds--although we
classify the Belarus government's general
propensity to support the GRE sector as
doubtful. Key government figures, including
the prime minister, are members of DBRB's
supervisory board, allowing the state to
maintain close oversight of the bank's
activities. The bank enjoys special legal status
and is exempt from most of the regulations
set by the National Bank of the Republic
of Belarus (NBRB; the central bank) for the
banking sector. Given the very small size of the
bank's commercial debt (0.3% of GDP) relative
to the GRE sector's debt (over 10% of GDP),
we believe the government would prioritize
extraordinary support to DBRB ahead of other
GREs; and
––Critical public policy role as the main
institution providing long-term capitalintensive loans under government programs
in Belarus, which cannot otherwise be
undertaken by banks on commercial terms.
Accounting for over 4% of GDP, 7% of total
banking system assets, and 40% of total
state-directed corporate lending, DBRB is
the key agent in the selected sectors that
106
Central Government Agencies 2016 | September 2016
the government deems essential for Belarus'
economy, such as transport infrastructure and
some subsectors of the agricultural sector. As
of 2016, DBRB will coordinate all loans to be
granted under government programs.
We assess DBRB's stand-alone credit profile
(SACP), including ongoing government support, at
'b-'. This reflects the bank's anchor of 'b-' as well
as factors specific to the bank.
The DBRB was established in 2011 following the
International Monetary Fund's recommendation
on reforming Belarus' banking sector, which was
heavily involved in directed subsidized lending
under vaguely defined government programs.
The bank's initial purpose was to centralize
lending under such programs, thereby allowing
commercial banks to function on market terms.
DBRB's mandate has since broadened, and its
primary goals as of mid-2015 include:
––Financing capital-intensive long-term
investments and important social projects,
particularly those specified in state
development programs;
––Acting as an export bank supporting Belarusian
producers focused on overseas markets;
––Managing and supervising nonperforming
directed loans under some government
programs on behalf of the government;
Ratings:
B-/Stable/B
Last Ratings Action
And Date
Ratings affirmed on
Jul. 30, 2015
SACP:
bLOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To provide long-term
capital-intensive
loans under
government programs
in Belarus, which
would not otherwise
be commercially
viable.
Issuer Website:
brrb.by
Primary Credit
Analyst:
Karen Vartapetov
Moscow
(7) 495-783-40-18
karen.vartapetov@
spglobal.com
Secondary Credit
Analyst:
Viktor Nikolskiy
Moscow
(7) 495-783-40-10
viktor.nikolskiy@
spglobal.com
Ratings At End June
2015:
B-/Stable/B
Ratings At End June
2008:
N/A
––Supporting development and extending
investment credit to small and midsize
enterprises (SMEs); and
––Serving as an agent of the government for
managing so-called "family capital", cashless
lump sums, introduced in late 2014, to families
spglobal.com/ratings
Summary Analysis
with three children or more, which have to be
managed for 18 years to maintain a minimum
yield before they can be spent on housing or
education.
We regard DBRB's business position as adequate,
owing to its growing franchise and market
position since starting its operations. With about
$2.6 billion in assets as of Dec. 31 , 2015, DBRB
accounted for 7% of systemwide assets, making
it the fourth largest bank in Belarus. Although
part of the bank's longer-term strategy remains
exposed to changes in government policy, its core
business of providing loans under government
projects has been solidly expanding. During 20132015, DBRB opened six new branches in Belarus'
largest cities.
We believe that DBRD's capital and earnings are
adequate. Despite high levels of capitalization
observed historically, we note a negative trend in
capitalization mirroring loan growth. However, we
believe that in the next three years, capitalization
will stabilize at adequate levels given the
government's capital injections and lowerthan-expected growth rates for the next three
years. At the same time, the SACP assessment
also reflects our continued view of the bank's
adequate business position, moderate risk
position, average funding, and adequate liquidity.
Outlook
Our stable outlook on DBRB mirrors our outlook
on Belarus. We could raise the ratings on DBRB
if we were to take a positive rating action on
Belarus. We could lower the ratings on the
bank following a negative rating action on
the sovereign. Even if the sovereign rating is
unchanged, we would take a negative action on
DBRB if its link to, or role for, the government
weakened and we revised downward our
assessment of its SACP.
JSC Development Bank of the Republic of Belarus: Selected Indicators
Period
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
BYR
BYR
BYR
BYR
BYR
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
31.7
31.6
31.2
22.1
0.0
Leverage ratio (%)
30.7
31.4
31.8
20.0
-2.3
Total adjusted capital/adjusted assets (%)
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
30.7
31.4
31.8
20.0
-2.3
-16.7
-11.7
-12.1
-16.4
-31.5
89.7
189.2
136.8
108.9
141.0
2.7
1.7
2.2
9.4
-2.5
31.7
36.0
28.6
66.3
-1605.4
398.2
312.7
273.7
1026.5
N.M.
Growth in customer loans (%)
32.9
12.2
96.2
361.8
N.M.
Growth in loss reserves (%)
65.6
2.7
104.8
196.0
N.M.
Growth in adjusted assets (%)
29.5
1.5
31.1
48.9
N.M.
YoY growth in loan loss provisions (%)
264.6
-64.8
47.0
102.8
N.M.
Stable funding ratio (%)
127.4
139.1
132.0
197.8
N/A
Short-term wholesale funding/total wholesale funding (%)
26.4
15.4
5.1
3.4
1.6
Total wholesale funding / funding base (%)
79.5
81.0
85.8
96.8
86.6
Short-term wholesale funding/funding base (%)
21.0
12.5
4.4
3.3
1.4
Loan loss reserves/gross nonperforming assets (%)
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
107
Summary Analysis
JSC Development Bank of the Republic of Belarus: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
BYR
BYR
BYR
BYR
BYR
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
1923528
1617535
967579
3160668
20990
15073895
11770888
14279678
14388005
16706179
1140764
434696
886795
389041
60898
34951160
26305756
23436675
11946324
2587158
6383945
3855646
3755824
1833486
619330
Period
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
28567215
22450110
19680851
10112838
1967828
Earning assets
53089337
39639608
39569653
29883211
19354235
Equity interests/participations (nonfinancial)
0
0
0
0
0
658302
331469
291657
40839
111623
Total assets
48437704
37406796
36845226
28095392
18869253
Adjusted assets
48414831
37397671
36832117
28093935
18869253
All other assets
Liabilities (category name - no data)
Total deposits
13604947
8244916
4981141
800506
2604423
Other borrowings
19610576
17122847
19819551
21666489
16706929
Other liabilities
348476
301436
335627
2100
819
Total Liabilities
33563999
25669199
25136319
22469095
19312171
Total equity
14873705
11737597
11708907
5626297
-442918
Common shareholders' equity (reported)
14349840
11082562
11057600
5626297
-442918
Equity (category name - no data)
Other items
Nonperforming assets
1603259
1233202
1372393
178613
0
Preprovision operating income
3717946
1485945
2631267
3953964
29090
Credit loss provisions (net new)
2369178
649801
1846436
1255875
619330
Net income before extraordinaries
1437481
629575
614247
2631501
-478973
0
0
0
0
0
Extraordinary income
108
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
JSC National Management
Holding Baiterek
Rationale
The ratings on Baiterek Holding are primarily
supported by its integral link with the government
of Kazakhstan and the role it plays in managing
key government development institutions and
implementing several national programs. We
rate Baiterek Holding under our criteria, "Group
Rating Methodology" and "Rating GovernmentRelated Entities: Methodology And Assumptions,"
published on RatingsDirect.
Baiterek group and its parent company Baiterek
Holding (the holding company) were established
in 2013 by presidential decree. The group is
controlled by the government, which fully owns
the holding company. At present, there are 11
subsidiaries under the holding company, which
can be broadly characterized as development
institutions playing a key role in implementing
several strategic government programs.
Specifically, the group is mandated by the
government to:
––Foster the development and diversification of
the Kazakhstan economy;
––Support small and midsize enterprises; and
––Resolve some of the state’s socially oriented
tasks, in particular in the housing segment.
The group is involved in channeling sizable
state resources to the economy of Kazakhstan
in order to fulfill the aforementioned goals. For
instance, in 2015, Baiterek Holding received over
Kazakhstani tenge (KZT) 300 billion (close to 1%
of Kazakhstan's 2015 GDP) from the National Oil
Fund of the Republic of Kazakhstan (sovereign
wealth fund) which it on-lent to the subsidiaries.
In addition, the government increased the holding
company's share capital by KZT40 billion, which
was in turn used to capitalize a key subsidiary,
Central Government Agencies 2016 | September 2016
Ratings:
BB+/Negative/B
Last Ratings Action
And Date
Ratings affirmed on
Jun. 30, 2016
Development Bank of Kazakhstan, by the same
amount.
SACP:
N/A
We continue to assess the likelihood that the
government of Kazakhstan will provide timely
extraordinary support to the consolidated group
in a stress scenario as almost certain. This is
based on our view of the group's:
––Integral link with the government, which owns
100% of the holding company. Being one of the
three national management holdings in the
country, Baiterek Holding has a special public
status. The government closely oversees the
activities of the group; and
––Critical public policy role as the primary
vehicle for implementing a number of strategic
government programs.
Consequently, the group credit profile (GCP) is
'bbb-', which aligns with the sovereign credit
rating on Kazakhstan. Our ratings on Baiterek
Holding are one notch lower than the GCP
reflecting the higher credit risks characteristic
of a nonoperating holding company compared
with its operating subsidiaries. In our view, in a
hypothetical scenario of the group being under
stress, the government may consequently have
incentives to rescue the subsidiaries ahead of the
holding company.
Our assessment of Baiterek group's business
position as moderate reflects its short
operational track record as a recently created
structure in 2013 and the difficulties the holding
could face implementing a cohesive management
approach across the operating entities.
LOS:
Extremely high
Role:
Very important
Link:
Integral
Key Policy Role:
To act as the
primary vehicle
for implementing
government policies
and supporting nonextractive sectors of
the economy, SMEs
and social objectives.
Issuer Website:
www.baiterek.gov.kz
Primary Credit
Analyst:
Maxim Rybnikov
London
(44) 20-7176-7125
maxim.rybnikov@
spglobal.com
Secondary Credit
Analyst:
Annette Ess, CFA
Frankfurt
(49) 69-33-999-157
annette.ess@
spglobal.com
Ratings At End June
2015:
BBB/Negative/A-2
Ratings At End June
2008:
N/A
We regard Baiterek group's capital and earnings
as strong, reflecting our view that a negative trend
in its loss-absorption capacity will prevail over
spglobal.com/ratings
109
Summary Analysis
the next two years, leading to a reduction in its
capitalization to strong from very strong previously.
Baiterek does not have a profit maximizing
objective. Nevertheless, it seeks to ensure a return
that is sufficient to cover its ongoing activities and
investment projects.
Our moderate assessment of Baiterek group's risk
position mainly reflects its weaker loss experience
than Kazakh commercial banks (excluding
restructured banks), rapid loan growth, the
directed lending nature of its loans, and a very high
share of loans in foreign currencies. We view rapid
loan growth as one of main risks.
In our opinion, Baiterek group's consolidated
funding is below average, reflecting a high
refinancing risk due to its concentrated funding
profile. Furthermore, a lack of banking status
prevents access to the central bank's discount
window.
We assess liquidity as adequate. Cash and cash
equivalents accounted for 11% of total assets at
year-end 2015, placements with banks accounted
for 16%, and available-for-sale securities for an
additional 11%, which together form a high level of
liquid assets at the consolidated level. However,
the lack of fungibility of liquid assets, due to
various legally independent entities, tempers our
assessment of the group's liquidity.
Outlook
The negative outlook mirrors that on the sovereign.
We would likely revise the outlook on Baiterek
Holding if we took a similar action on the sovereign
over the next 12 months. All else being equal, a
one-notch lowering of our long-term ratings on
Kazakhstan and the corresponding change in the
group's supported GCP could lead to a two-notch
lowering of our ratings on Baiterek Holding.
We could also lower the ratings over the next 12
months if we saw signs of waning government
JSC National Management Holding Baiterek: Selected Indicators
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
Currency
KZT
KZT
KZT
KZT
Denomination
Mil.
Mil.
Mil.
Mil.
Period
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
Leverage ratio (%)
25.6
34.3
36.0
33.1
Total adjusted capital/adjusted assets (%)
25.0
34.3
36.0
33.1
2.5
2.9
6.9
15.4
66.6
87.2
95.0
127.0
1.5
1.8
0.7
0.8
Core earnings/operating revenues (%)
36.6
53.8
24.5
39.5
Loan loss reserves/gross nonperforming assets (%)
80.1
83.5
77.1
63.1
Growth in customer loans (%)
57.3
52.4
24.6
N.M.
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Growth in loss reserves (%)
14.3
1.7
14.1
N.M.
Growth in adjusted assets (%)
48.8
24.7
2.9
N.M.
N.M.
-110.5
532.4
N.M.
143.6
167.2
161.1
185.3
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
110
Central Government Agencies 2016 | September 2016
2.2
6.9
3.2
4.3
86.5
82.2
82.1
87.7
1.9
5.7
2.6
3.7
spglobal.com/ratings
Summary Analysis
JSC National Management Holding Baiterek: Summary Balance Sheet
Year
Period
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
Currency
KZT
KZT
KZT
KZT
Denomination
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
921217
710205
540700
432997
Securities
438230
416733
575482
628098
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
0
0
0
150593
1979049
1257841
825324
662580
183369
160383
157669
138219
Customer loans (net)
1795680
1097457
667654
524361
Earning assets
3017071
2132151
1727114
1720848
2079
3725
7239
9025
Equity interests/participations (nonfinancial)
All other assets
168203
68472
53918
53327
Total assets
3460326
2324915
1865077
1812302
Adjusted assets
3457986
2323394
1863770
1811349
314423
260090
203569
139720
Liabilities (category name - no data)
Total deposits
Other borrowings
2007514
1200796
931180
998671
Other liabilities
275390
64283
55271
47583
Total Liabilities
2597327
1525169
1190020
1185974
Equity (category name - no data)
Total equity
862998
799746
675057
626328
Common shareholders' equity (reported)
858609
798899
671664
624900
Nonperforming assets
228945
192116
204471
219054
Preprovision operating income
110483
50568
29411
19002
Credit loss provisions (net new)
29757
-1389
13168
2082
Net income before extraordinaries
49017
41298
29422
14121
0
0
0
0
Other items
Extraordinary income
support to the group. The continued deterioration
of the group's consolidated creditworthiness could
be one of such signs potentially signaling lower
commitment of the government to the group. In
addition, we could lower the ratings if we perceived
the role of Baiterek Holding for the government as
reducing in contrast to the role of the overall group.
We could consider an upgrade if we perceived that
the holding company's role for the government
and its relative importance within the group had
increased.
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
111
Summary Analysis
Kreditanstalt fuer Wiederaufbau (KfW)
Rationale
We equalize our ratings on German state-owned
development bank KfW with those on the Federal
Republic of Germany, since we believe that there
is an almost certain likelihood that KfW would
receive timely and sufficient extraordinary
support from the German government in the event
of financial distress. Additionally, KfW's liabilities
are backed by an explicit federal government
guarantee. KfW, an institution incorporated
under German public law, benefits from the
federal government's maintenance obligation
(Anstaltslast), which requires the federal
government to safeguard KfW's economic health
and maintain its ability to operate and meet its
obligations in a timely manner.
We consider KfW to be a government-related
entity, under our criteria, based on our view of its:
––Critical role for the federal government, given
that KfW is Germany's flagship development
bank and among the country's largest financial
institutions. The government uses KfW to
implement its economic policy goals, for
instance with subsidized loan programs; and
––Integral link with Germany's federal government
and, to a lesser extent, the state governments.
The Federal Republic of Germany owns 80% of
KfW, and the regional states hold 20%. KfW has
the status of a public law institution and is a
government agency.
The federal government provides additional
support to KfW in the form of enhancements.
Its obligation to KfW under the Anstaltslast
constitutes a charge on public funds that would
be realizable without an act of parliament. The
maintenance obligation alone, however, does
not constitute a formal guarantee of KfW's
obligations, and KfW's creditors do not have a
direct claim against the federal government under
the Anstaltslast.
112
Central Government Agencies 2016 | September 2016
In addition to the Anstaltslast, and effective from
April 1, 1998, a statutory guarantee was included
in the legislation governing KfW, through which the
federal government expressly guarantees KfW's
obligations. Under this statutory guarantee, in the
event of a payment default, holders of securities
issued or guaranteed by KfW can enforce their
claims directly against the federal government
without first recourse to the bank. In this respect,
we understand that the Federal Republic will be
liable at all times for that payment as and when
it becomes due and payable. KfW reported total
assets of €489 billion at year-end 2014, up 5.2%
from 2013. This increase was largely the result of
the revaluation of assets due to the low-interestrate environment. On June 30, 2015, KfW's total
reported assets stood at €505 billion.
KfW issues debt in international capital markets
and uses the proceeds through the commercial
banking system to provide predominantly
financing, for example, for infrastructure, small
and midsize enterprises (SMEs), housing, and
environmental projects in Germany and, to a
limited extent, elsewhere in Europe. Abroad, KfW
is responsible for Germany's official financial
cooperation with developing countries as well
as export and project financing. KfW's legally
independent subsidiary, KfW IPEX-Bank GmbH,
handles export and project financing.
In addition, the German government has used
KfW to implement economic and fiscal policy
goals in the wake of the 2008 global economic
downturn. For instance, KfW played a pivotal
role in implementing the German government's
fiscal stimulus packages in 2009-2010. KfW also
assumed €15.2 billion of Germany's contribution
for the loan package from Eurozone countries
to Greece, and the German government is
guaranteeing KfW's loans to Greece.
Ratings:
AAA/Stable/A-1+
Last Ratings Action
And Date
Ratings affirmed on
Oct. 8, 2015
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To implement the
German government's
economic policy
goals. Germany's
flagship development
bank and among the
country's largest
financial institutions
Issuer Website:
www.kfwentwicklungsbank.de
Primary Credit
Analyst:
Alois Strasser
Frankfurt
(49) 69-33-999-240
alois.strasser@
spglobal.com
Secondary Credit
Analyst:
Sabine Daehn
Frankfurt
(49) 69-33-999-244
sabine.daehn@
spglobal.com
Ratings At End June
2015:
AAA/Stable/A-1+
Ratings At End June
2008:
AAA/Stable/A-1+
Since the second half of 2013, an amendment
to the KfW law has been in effect, giving power
spglobal.com/ratings
Summary Analysis
to the German Federal Ministry of Finance
(in consultation with the Federal Ministry of
Economics and Energy) to declare provisions to
European and German bank regulation applicable
by analogy to KfW. The German bank regulator,
BaFin, has assumed the supervision of such
provisions. The legal supervision of KfW remains
with the Federal Ministry of Finance, however,
in consultation with the Federal Ministry of
Economy and Energy. However, KfW is exempt
from the bank restructuring and resolution
regime.
Outlook
Our stable outlook on KfW reflects that on Germany.
We believe that the explicit and implicit support
for KfW from the federal government will continue,
underpinned by the European Commission's
confirmation of Germany's maintenance obligation
(Anstaltslast) and the federal government's explicit
guarantee of KfW's obligations as stipulated under
a 2002 agreement. We would lower the rating on
KfW, if we lowered our ratings on Germany or if
we believed that the likelihood of extraordinary
government support had weakened.
KfW: Selected Indicators
Period
Currency
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
18.3
14.1
20.6
18.2
15.4
Leverage ratio (%)
5.6
5.0
4.7
4.1
4.1
Total adjusted capital/adjusted assets (%)
5.1
4.5
4.4
3.6
3.7
Net nonperforming assets/customer loans + other real estate owned (%)
0.1
0.7
1.0
1.5
1.0
73.8
84.5
82.4
81.5
88.8
0.4
0.3
0.3
0.5
0.4
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
61.6
52.8
43.5
66.4
76.5
Loan loss reserves/gross nonperforming assets (%)
89.7
68.2
63.0
53.8
81.8
Growth in customer loans (%)
Growth in loss reserves (%)
12.6
3.7
-1.1
-3.1
9.4
-15.5
-6.2
-1.7
-57.5
-8.9
Growth in adjusted assets (%)
2.8
5.2
-8.8
2.9
12.0
YoY growth in loan loss provisions (%)
N/A
N/A
N/A
N/A
N/A
212.4
236.5
236.1
255.0
238.6
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
29.6
25.7
24.1
23.6
28.3
Total wholesale funding / funding base (%)
97.9
97.7
97.3
96.8
95.3
Short-term wholesale funding/funding base (%)
29.0
25.1
23.5
22.8
26.9
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
113
Summary Analysis
KfW: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
17631
5671
8552
8747
14249
Assets (category name - no data)
Cash and money market instruments
Securities
29238
28600
28535
29774
30029
Loans to banks (net)
259710
274982
273714
286524
277719
Customer loans (gross)
132363
117559
113419
114683
118306
1574
1857
1952
1979
4940
Loan loss reserves
Customer loans (net)
130789
115702
111467
112704
113366
Earning assets
440996
428377
425160
437270
439306
Equity interests/participations (nonfinancial)
2686
2300
2183
1929
1876
All other assets
1374
1376
1215
1412
1310
Total assets
502973
489072
464755
509424
494818
Adjusted assets
502767
488914
464624
509346
494772
33628
28033
23989
40085
43887
415474
405846
387213
413089
402076
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
28583
33119
32372
36877
31007
Total Liabilities
477773
467474
444242
491184
476970
Total equity
25200
21598
20513
18240
17848
Common shareholders' equity (reported)
25200
21598
20513
18240
17848
Nonperforming assets
1755
2724
3098
3678
6040
Preprovision operating income
2349
1752
1647
2644
1913
Equity (category name - no data)
Other items
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
114
Central Government Agencies 2016 | September 2016
48
143
311
155
-185
2171
1514
1273
2413
2068
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
Korea Development Bank (KDB)
Ratings:
AA/Stable/A-1+
Rationale
Last Ratings Action
And Date
Ratings raised on
Aug. 08, 2016
The ratings on KDB reflect our view of the bank's
status as a government-related entity (GRE)
with an almost certain likelihood of receiving
timely and sufficient extraordinary support from
the government of Korea in the event of financial
distress. Our assessment of the likelihood of
support is based on KDB's critical role for, and
integral link with, the Korean government.
In our view, KDB's role will remain critical to
the Korean government since its policy role
has been strengthening under the current
administration, which merged Korea Finance
Corp. (KoFC) with KDB in 2014 to further
reinforce KDB's policy banking role. The
government has also guided the bank to take a
more active role in promoting various corporate
infrastructure investments. We expect KDB
to maintain its active policy role, including
operating as a frontline financial institution to
extend liquidity support to weak companies in
the shipbuilding, shipping, and construction
sectors. These sectors have struggled to obtain
refinancing from the domestic debt capital
market in recent years. We also believe that the
bank will continue focusing on the long-term
facility loans that it provides on the back of
its development financing role and long-term
funding capabilities. It will likely also continue
to focus on the restructuring of large Korean
corporations.
We expect KDB to maintain its integral link with
the Korean government, which owns KDB and
has injected cash and securities to strengthen
the bank's capital in the past. Further, we note
that the government exerts significant control
and influence on KDB's management, including
appointing the bank's president and determining
its budgetary decisions. The government's
legal obligation to maintain the bank's
solvency supports our view of its link with the
government, although we see it as a sign of the
Central Government Agencies 2016 | September 2016
government's commitment rather than a direct
guarantee of timely payment of all of the bank's
obligations.
We expect KDB's business position to remain
moderate overall. KDB is the fourth largest
bank in the Korean domestic market in terms of
assets, accounting for about 10% of the market
after the bank's merger with KoFC as of Dec. 31,
2014. However, due to the lack of a retail funding
base, KDB only accounted for about 2% of
system deposits on that date. Large corporate
loans account for about 70% of KDB's total
loans, since KDB provides long-term facilities
on the back of its development financing role
and long-term funding capabilities. Based
on KDB's long-term relationships with its
customers, it is also strongly focused on
the domestic investment banking sector,
particularly in project financing, syndicated
loan arrangements, and underwriting of
corporate bonds. We note that profitability has
been relatively volatile, due to KDB's focus on
corporate and investment banking businesses
in Korea. We expect the large exposures in weak
corporate sectors, especially shipbuilding,
shipping, and construction, to keep weighing on
KDB's profitability.
Despite a weak earnings outlook, we expect
the bank to maintain its current level of
capitalization, given that the government
injected Korean won (KRW) 2 trillion in capital
into the bank in the first half of 2015. We also
expect to see relatively modest loan growth
because KDB's management team is likely to
continue focusing on managing risks, especially
after the merger with KoFC and in view of
pressure on asset quality, in our opinion.
SACP:
bbLOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To provide long-term
facility loans and
lead restructuing
and extend liquidity
supports to
corporations in weak
sectors, such as
shipbuilding, shipping,
and construction .
Issuer Website:
www.kdbbank.eu/
kdb-bank-seoul
Primary Credit
Analyst:
HongTaik Chung
Hong Kong
(852) 2533-3597
hongtaik.chung@
spglobal.com
Secondary Credit
Analyst:
Daehyun Kim
Hong Kong
(852) 2533-3508
daehyun.kim@
spglobal.com
Ratings At End June
2015:
A+/Positive/A-1
Ratings At End June
2008:
A/Negative/A-1
We think KDB will maintain relatively high
concentration in large corporate sectors,
including construction, shipping, and
shipbuilding, where asset quality has been
spglobal.com/ratings
115
Summary Analysis
under significant pressure, as well as relatively
large investment banking activities. In addition,
as KDB reinforces its policy banking role, it could
become more reluctant to reduce its exposures
to troubled large corporates because they
could significantly hurt the Korean economy, in
our view. KDB has also experienced relatively
high credit costs in recent years amid volatile
earnings. We expect KDB will maintain its
current funding and liquidity profiles in the
coming few years. The bank's funding capability
from deposits is significantly weaker than that
of commercial banks due to its underdeveloped
retail franchise. KDB's overall liquidity position
is adequate, even though its liquidity ratios
are weak, reflecting its policy bank position.
However, based on KDB's policy role, which has
given the bank good access to both domestic
and international capital markets, KDB is unlikely
to face difficulties in rolling over its borrowings, in
our view.
Outlook
The stable outlook on the long-term foreigncurrency rating on KDB reflects the outlook on
the foreign-currency sovereign rating on Korea.
We equalize the ratings on KDB with those on
the sovereign ratings and the ratings will move
in tandem. The stable outlook on the sovereign
ratings reflects our expectation that Korea's credit
metrics will remain broadly unchanged over the
next two years. The sovereign ratings could come
under pressure if geopolitical tensions related to
North Korea escalate to a point that leads to longterm damage to the South Korean sovereign's
credit metrics.
Korea Development Bank: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
KRW
KRW
KRW
KRW
KRW
Bil.
Bil.
Bil.
Bil.
Bil.
Tier 1 capital ratio (%)
12.2
11.9
12.3
13.6
14.2
Leverage ratio (%)
10.0
9.1
9.5
10.7
11.5
9.9
9.0
9.3
10.4
11.1
Period
Currency
Denomination
Total adjusted capital/adjusted assets (%)
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
1.9
0.2
1.2
1.3
0.5
29.9
47.6
194.1
63.1
61.2
0.7
0.5
-1.0
0.6
0.9
Core earnings/operating revenues (%)
28.0
26.4
-153.5
28.6
42.8
Loan loss reserves/gross nonperforming assets (%)
62.1
89.1
61.3
42.9
73.0
0.5
46.3
6.5
12.2
13.7
Growth in customer loans (%)
Growth in loss reserves (%)
65.9
46.3
112.1
-18.5
-47.6
Growth in adjusted assets (%)
11.6
64.5
1.4
11.2
7.6
YoY growth in loan loss provisions (%)
49.1
23.4
257.5
94.0
-81.7
Stable funding ratio (%)
57.7
76.6
78.0
74.8
73.1
Short-term wholesale funding/total wholesale funding (%)
52.3
47.2
47.0
48.2
54.1
Total wholesale funding / funding base (%)
79.2
80.4
68.2
65.0
75.5
Short-term wholesale funding/funding base (%)
41.4
38.0
32.1
31.3
40.8
116
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Korea Development Bank: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
KRW
KRW
KRW
KRW
KRW
Bil.
Bil.
Bil.
Bil.
Bil.
7895
10895
7436
4006
3796
55500
72827
36461
35393
35784
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
0
0
0
0
0
146990
146227
99934
93794
83566
4550
2743
1875
884
1085
Customer loans (net)
142440
143484
98059
92910
82481
Earning assets
208160
228090
141071
131982
122403
26607
22014
3073
3276
3020
Equity interests/participations (nonfinancial)
53184
10940
11839
12892
12308
Total assets
All other assets
309492
277278
167725
165525
149021
Adjusted assets
306365
274515
166883
164590
148057
41432
41666
39336
39776
26299
Liabilities (category name - no data)
Total deposits
151784
156862
78029
68924
74477
Other liabilities
Other borrowings
76787
34646
25313
30991
21227
Total Liabilities
275549
247074
148970
144639
128447
Total equity
33942
30204
18755
20886
20574
Common shareholders' equity (reported)
29179
25794
16773
18438
17966
Nonperforming assets
7327
3078
3056
2060
1487
Preprovision operating income
6116
3112
-639
1604
1929
Credit loss provisions (net new)
2977
1997
1618
453
233
Net income before extraordinaries
1736
982
-1219
941
1340
0
0
0
0
0
Equity (category name - no data)
Other items
Extraordinary income
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
117
Summary Analysis
Landwirtschaftliche
Rentenbank
Rationale
The ratings on Landwirtschaftliche Rentenbank, a
specialized development bank with a public policy
mandate to promote German agriculture (including
forestry and fisheries) and rural areas, are based
on our assessment of an almost certain likelihood
of extraordinary support from the government of
the Federal Republic of Germany. This means any
rating or outlook change on Germany would lead to
a similar rating action on Rentenbank.
In line with our criteria for rating government
related entities (GREs), this reflects our view that
Germany's support for its related entities is not
doubtful. Our assessment of an almost certain
likelihood of support is based on our view of
Rentenbank's:
––Integral link with the government. Although the
government is not Rentenbank's legal owner, the
legal concept of "Anstaltslast" (maintenance
obligation) means that the government, as the
creator of Rentenbank, is obliged to safeguard
Rentenbank's economic foundation for the
duration of its existence, providing support
when necessary. In addition to the Anstaltslast,
and effective from Jan. 1, 2014, a statutory
guarantee is included in the legislation governing
Rentenbank, through which the federal
government expressly guarantees Rentenbank's
obligations. Under this statutory guarantee, in the
event of a payment default, holders of securities
issued or guaranteed by Rentenbank can
enforce their claims directly against the federal
government without first recourse to the bank;
and
––Rentenbank's critical public policy role, which
includes promoting Germany's rural areas
and contributing to ensure the constitutional
mandate of equal living opportunities across the
territory of the Federal Republic.
118
Central Government Agencies 2016 | September 2016
Ratings:
AAA/Stable/A-1+
Last Ratings Action
And Date
Ratings affirmed on
Jan. 27, 2016
Rentenbank's operational strategy is low risk, in
our opinion. Intermediate banks assume credit
risk and provide collateral to Rentenbank. In
addition, we believe Rentenbank benefits from
an outstanding track record of loan recovery,
conservative capitalization, and a stable financial
profile characterized by prudent strategies for
comprehensively hedging currency and interest
rate risks.
Rentenbank has supported the government's
agricultural and rural policy objectives since 1949
through the provision of financing to the agriculture
and food sectors. The bank predominantly raises
its funds in the international capital markets. It
provides resources through intermediate banks,
which on-lend to the ultimate borrower, assume
the credit risk, and provide collateral. Standard
promotional loans are offered at competitive
rates, including to banks in other EU member
states and Norway. Special promotional loans with
favorable financial conditions are Rentenbank's
key promotional instruments, but their use is
restricted to financing programs and investments
benefiting the German agricultural and food sector,
as well as rural areas in general. Given the bank's
public policy mandate, profitability is consciously
low; however, its stable and risk-weighted
capitalization remains comfortable, in our view.
Although the bank's capital was raised through
a special levy on the German agricultural and
forestry sector between 1949 and 1958, no
natural or legal person possesses property rights
over Rentenbank (rather, the bank belongs to
the agricultural sector). Accordingly, a merger or
takeover by another publicly owned development
bank is not viable. However, the ownership
structure makes it almost impossible for the bank
to raise additional shareholder capital, meaning
capital can only increase through retained
earnings.
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To promote Germany's
rural areas and
contributing to ensure
the constitutional
mandate of equal
living opportunities
across the territory of
the Federal Republic.
Issuer Website:
www.rentenbank.de
Primary Credit
Analyst:
Sabine Daehn
Frankfurt
(49) 69-33-999-244
sabine.daehn@
spglobal.com
Secondary Credit
Analyst:
Harm Semder
Frankfurt
(49) 69-33-999-158
harm.semder@
spglobal.com
Ratings At End June
2015:
AAA/Stable/A-1+
Ratings At End June
2008:
AAA/Stable/A-1+
spglobal.com/ratings
Summary Analysis
Government support for Rentenbank complies
with the EU's rules on state aid, unlike the now
defunct guarantees for German Landesbanks.
The agreement stated that German development
banks could continue to benefit from state
support to the extent that they are entrusted with
promotional tasks in compliance with the EU's
state aid rules. Rentenbank's obligations will
continue to be fully and unconditionally supported
by the German government under the Anstaltslast.
While the Anstaltslast creates an obligation of
the federal government vis-à-vis Rentenbank,
as of Jan. 1, 2014, a statutory guarantee is
included in the legislation governing Rentenbank,
through which the federal government expressly
guarantees Rentenbank's obligations. This
guarantee is identical to the one in place
for KfW, and is an obligation of the federal
government vis-à-vis Rentenbank's creditors.
The strong use of commercial paper (CP)
demonstrates, in our view, that access to
liquidity is not a concern for Rentenbank. Even
under the adverse market conditions in 2008,
demand for Rentenbank's CP was strong, with
over €16 billion of CP outstanding at midyear
2008. Cash and balances with central banks
are minimal. As a registered bank, Rentenbank
has access to European Central Bank liquidity,
which could be used to access funds if there
are disruptions in the short-term wholesale
funding markets.
Landwirtschaftliche Rentenbank: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
20.2
16.4
23.9
21.9
17.2
4.2
3.9
4.0
3.3
3.0
Period
Currency
Leverage ratio (%)
Total adjusted capital/adjusted assets (%)
3.9
3.6
3.8
3.0
2.8
Net nonperforming assets/customer loans + other real estate owned (%)
N/A
N/A
N/A
N/A
N/A
Net interest income/operating revenues (%)
61.6
227.0
59.9
115.7
22618.8
0.5
0.1
0.6
0.3
-0.1
83.3
45.4
83.2
77.4
-4331.3
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
N/A
N/A
N/A
N/A
N/A
Growth in customer loans (%)
15.4
-0.7
19.7
63.0
88.1
Growth in loss reserves (%)
N/A
N/A
N/A
N/A
N/A
Growth in adjusted assets (%)
5.0
8.4
-7.3
-0.6
6.1
YoY growth in loan loss provisions (%)
21.6
-55.7
66.7
32.7
212.0
Stable funding ratio (%)
N/A
N/A
N/A
N/A
N/A
Short-term wholesale funding/total wholesale funding (%)
30.1
28.4
23.9
23.5
24.4
Total wholesale funding / funding base (%)
94.9
94.1
92.9
92.4
92.2
Short-term wholesale funding/funding base (%)
28.5
26.7
22.2
21.7
22.5
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
119
Summary Analysis
Outlook
The stable outlook reflects our expectation that
Rentenbank will remain an integral part of the
government's economic development policies.
This should enable the bank to maintain its
public law status and secure ongoing federal
government support, either through the
Anstaltslast or the explicit guarantee for the
liabilities.
We expect that Rentenbank will continue to
generate modest but stable operating profits,
consistent with its public policy mandate. In
addition, we expect its risk-adjusted capital
ratios will remain very comfortable. We could
lower the ratings if we observed a material
weakening of Rentenbank's role for, or link
with, Germany, including changes to the legal
guarantee. We think it highly unlikely that
Rentenbank will undergo a change in its legal
status over the coming two years.
Landwirtschaftliche Rentenbank: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
24
30
337
1813
1089
Securities
19793
21582
20776
22470
24619
Loans to banks (net)
55455
51407
49447
49556
51073
6381
5530
5571
4653
2854
0
0
0
0
0
Period
Currency
Denomination
Assets (category name - no data)
Cash and money market instruments
Customer loans (gross)
Loan loss reserves
Customer loans (net)
Earning assets
Equity interests/participations (nonfinancial)
6381
5530
5571
4652
2854
81632
78520
76097
78286
78856
119
119
119
119
119
2934
2568
1717
1038
1232
Total assets
93293
88846
81932
88398
88877
Adjusted assets
93280
88832
81917
88383
88871
All other assets
Liabilities (category name - no data)
Total deposits
Other borrowings
7238
7139
10699
8671
9255
79427
76681
67344
73389
73337
Other liabilities
2942
1718
695
3817
4580
Total Liabilities
89607
85538
78738
85876
87171
Total equity
3686
3307
3194
2521
1706
Common shareholders' equity (reported)
3686
3307
3194
2521
1706
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
120
Central Government Agencies 2016 | September 2016
0
0
0
0
0
469
82
497
265
-53
19
15
35
21
16
443
60
460
244
-69
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
Magyar Export-Import Bank
Ratings:
BB+/Stable/B
Rationale
Last Ratings Action
And Date
Ratings affirmed on
Jul. 7, 2016
We equalize our rating on Hungary Eximbank with
the long-term sovereign credit rating on Hungary,
given our view of the bank as a governmentrelated entity (GRE) and our opinion that there is
an almost certain likelihood that the Hungarian
government will provide timely and sufficient
extraordinary support to Hungary Eximbank in the
event of financial distress.
In accordance with our criteria for GREs, we
base our view of an almost certain likelihood of
extraordinary support on our view of Hungary
Eximbank's:
––Critical role in supporting Hungarian exports,
which is a key policy objective and crucial to
national economic growth, given the country's
openness and trade dependence; and
––Integral link with the Hungarian government,
which is the bank's sole owner; the state's
statutory guarantee of Hungary Eximbank's
liabilities; and the inclusion of cost compensation
on the bank's interest rate mismatches and
supported loans in the government's budget.
Established in 1994, Hungary Eximbank operates
under the remit of the Ministry of Foreign Affairs
and Trade. The criteria for its export credit
operations, which make it eligible for statesupported financing, come from its general
business guidelines and the regulations of
international bodies, such as the Organization
of Economic Co-operation and Development
(OECD) and the European Commission. In its role
as Hungary's official credit export agency, the
bank supports Hungary's export growth strategy
by granting pre-export loans, buyers' credit,
and discounting facilities directly to exporters,
as well as by providing indirect funding through
refinancing loans to domestic commercial banks
and interbank import facilities of buyers' foreign
banks.
Central Government Agencies 2016 | September 2016
Due to the nature of the supported exports, the
bank plays a critical role for the government
to achieve its export strategy goals, and its
particular export financing closely interrelates
with its setup and support by the state. In 2015,
the mandate for the bank changed slightly
to include lending for the "national interest",
rather than only export financing. We expect
lending that is not directly related to exports, or
to projects with less value added, in Hungary to
increase.
The bank's loan portfolio has expanded rapidly
in recent years, and we expect credit growth
to continue in 2016, in line with the bank's
ambitious strategy to increase its activities.
Consequently, the bank's support for Hungarian
exports underlines its key policy role. Hungary
Eximbank's funding base comprises loans,
interbank loans, notes issued under a global
medium-term note program launched in
December 2012, and shareholders' equity,
including both share capital and reserves.
Hungary Eximbank benefits from the
government's statutory guarantee for both
its on-and off-balance-sheet liabilities.
The statutory guarantee is explicit and
unconditional, with a current upper limit defined
in the government's budget of Hungarian
forint (HUF) 1.2 trillion (about €3.8 billion). This
compares with the bank's on-balance-sheet
liabilities of HUF728 billion at year-end 2015.
Although the guarantee does not meet our
criteria for timeliness, our assessment of an
almost certain likelihood of timely and sufficient
extraordinary support to Hungary Eximbank
from the Hungarian government means that
we equalize our long-term rating on the bank
with that on Hungary. We anticipate that the
government has the capacity and incentive to
provide timely extraordinary support to the bank
if needed. We also take into consideration the
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
The bank plays a
critical role for the
Hungarian government
achieving its export
strategy goals, and
its particular export
financing closely
interrelates with its
setup and support by
the state.
Issuer Website:
www.exim.hu
Primary Credit
Analyst:
Eileen Zhang, CFA
London
(44) 20-7176-7105
eileen.zhang@
spglobal.com
Secondary Credit
Analyst:
Goeksenin Karagoez
Paris
(33) 1-4420-6724
goeksenin.karagoez@
spglobal.com
Ratings At End June
2015:
BB+/Stable/B
Ratings At End June
2008:
N/A
spglobal.com/ratings
121
Summary Analysis
government's sustained track record of ensuring
an appropriate level of capitalization at Hungary
Eximbank through repeated capital injections,
which further underpins the bank's link with the
state, in our view. The most recent capital increase
of a total HUF30.9 billion took place during
December 2015-March 2016, raising the bank's
share capital to HUF89 billion. The government has
made a commitment to further increase capital
if the loan book continues to grow. However, we
expect the current lending via commercial banks
to decelerate due to concentration constraints,
but direct lending to increase.
Hungary Eximbank also provides off-balancesheet guarantees, the majority of which are
guaranteed by the government, with the statutory
guarantee providing cover for up to HUF350 billion.
As of year-end 2015, HUF20.6 billion of Hungary
Eximbank's total guarantee portfolio of HUF22.9
billion benefitted from the statutory guarantee.
Outlook
The stable outlook on Hungary Eximbank
mirrors that on Hungary. We believe that
Hungary Eximbank's integral link with and
critical role for the Hungarian government's
economic policies and growth-support plans will
remain unchanged. This should enable the bank
to maintain its public law status and, therefore,
its credit support from the state's statutory
guarantee.
Any downward revision in our assessment of
the bank's relationship with the government
could lead us to consider lowering the ratings on
Hungary Eximbank. In particular, over the longer
term, strong lending outside of its traditional
export financing activities could potentially
reduce the policy importance of Hungary
Eximbank in the Hungarian economy. In addition,
any upgrade or downgrade of Hungary will result
in a similar action on Hungary Eximbank.
Magyar Export-Import Bank: Selected Indicators
Period
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
HUF
HUF
HUF
HUF
HUF
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
9.9
8.3
5.6
8.9
11.6
Leverage ratio (%)
12.3
10.9
4.6
7.1
9.0
Total adjusted capital/adjusted assets (%)
11.9
10.7
4.6
7.1
9.0
2.7
7.1
13.5
27.7
42.9
58.6
65.2
112.0
80.3
114.1
0.3
0.0
-0.2
0.3
0.3
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
17.2
-3.4
-19.6
15.1
13.2
Loan loss reserves/gross nonperforming assets (%)
67.0
28.8
28.7
20.6
17.1
Growth in customer loans (%)
-4.2
103.8
54.3
14.1
-16.6
Growth in loss reserves (%)
59.6
19.3
19.3
-1.8
-11.4
Growth in adjusted assets (%)
36.0
59.4
47.6
32.1
1.0
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
77.6
166.9
N.M.
-103.3
-75.6
121.4
109.8
120.4
135.7
85.9
Short-term wholesale funding/total wholesale funding (%)
14.3
6.6
14.4
9.2
46.5
Total wholesale funding / funding base (%)
97.9
100.0
100.0
100.0
100.0
Short-term wholesale funding/funding base (%)
14.0
6.6
14.4
9.2
46.5
122
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Magyar Export-Import Bank: Summary Balance Sheet
Period
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
HUF
HUF
HUF
HUF
HUF
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
195384
103845
121497
64125
60539
33758
1776
2105
25840
11088
Loans to banks (net)
367746
280962
155154
103760
68516
Customer loans (gross)
204291
213310
104650
67819
59439
Assets (category name - no data)
Cash and money market instruments
Securities
10608
5945
5385
4537
4850
Customer loans (net)
Loan loss reserves
193683
207365
99265
63282
54589
Earning assets
776677
597063
382927
259477
199909
0
0
0
0
0
Equity interests/participations (nonfinancial)
750
698
1117
1218
591
Total assets
All other assets
827439
608430
381591
258569
195781
Adjusted assets
827096
608065
381381
258419
195662
Total deposits
319659
164817
144156
128855
175696
Other borrowings
Liabilities (category name - no data)
404350
372699
211967
109148
0
Other liabilities
3691
4576
7383
1807
2399
Total Liabilities
727958
542957
363827
240056
178116
Equity (category name - no data)
Total equity
99481
65473
17764
18513
17665
Common shareholders' equity (reported)
99481
65473
17764
18513
17665
15841
20655
18757
22041
28285
7834
3984
1453
2156
2029
Credit loss provisions (net new)
4271
2405
901
-15
452
Net income before extraordinaries
2332
-267
-759
799
534
0
0
0
0
0
Other items
Nonperforming assets
Preprovision operating income
Extraordinary income
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
123
Summary Analysis
Nacional Financiera SNC
(NAFIN)
Rationale
The ratings on NAFIN continue to reflect its
critical role and integral link with the Mexican
government, and thus, our view of an almost
certain likelihood of extraordinary support for
NAFIN from the Mexican government.
Therefore, we equalize our ratings on NAFIN
with those on Mexico.
We maintain our view that NAFIN represents a
key instrument to the government's economic
strategy, and it is crucial in promoting the
development of small and midsize enterprises
(SMEs) in the country, which struggle to obtain
financial resources from the private sector.
Our view of an almost certain likelihood of
extraordinary government support for NAFIN
stems from the following factors:
––NAFIN plays a critical role in Mexico, given
its ability to provide financing to SMEs,
promoting development in the country. NAFIN
has performed a fundamental role as a public
policy instrument for the government through
the implementation of several programs, to
support companies affected during unfavorable
economic and market periods, by participating in
the country's debt market. This has contributed
to a substantial reduction of the refinancing risk
of these companies; and
government's strategy to promote national
development through the expansion of credit to
sectors underserved by commercial banking. The
bank is the second largest development bank in
Mexico with a 26.84% market share as of June
2015 in terms of assets, and remains among
the 10 largest banks in the country. Currently
20% of NAFIN's loan portfolio is direct lending,
which allows the bank to improve its business
diversification; the remaining 80% corresponds
to second-floor credit operations, decentralized
agencies, and public-sector lending. However,
credit granted through guarantee programs
permits NAFIN to increase its earnings via fees,
which we consider more stable and recurrent.
Our assessment on NAFIN's capital and earnings
is adequate, based on our forecast risk-adjusted
capital (RAC) ratio of at least 7%. In terms of
the quality of its capital and earnings, NAFIN's
capital structure has remained stable during the
past five years. Its equity is mainly composed
of paid-in capital and retained earnings with
no hybrids in its capital, which is mainly from
internal generation.
We view NAFIN's risk position as adequate,
considering its historical and projected asset
quality metrics. Its nonperforming assets were
1.35% as of June 30, 2015, and have averaged
0.96% during the last three fiscal years. Despite
––NAFIN is fully owned by the government, which is the expected loan portfolio growth, NAFIN is
involved in the strategy, budget, and designation likely to maintain its adequate asset quality,
thanks to its prudent risk management and good
of the bank's top management. NAFIN's
origination practices.
financial obligations are explicitly guaranteed
by the government, as specified in its bylaws. In
this sense, we believe NAFIN has an integral link We view NAFIN's funding as average. Even
though NAFIN doesn't collect retail deposits,
to the sovereign.
the government's guarantee of all of its
financial obligations results in superior financial
We still consider NAFIN's business position
flexibility. The latter, in our view, has allowed
adequate. The bank provides financing through
NAFIN to access long-term credit facilities with
financial intermediaries as part of the federal
124
Central Government Agencies 2016 | September 2016
Ratings:
BBB+/Negative/A-2
Last Ratings Action
And Date
Outlook revised to
Negative on Aug. 23,
2016
SACP:
bbb
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
To promote national
development through
the expansion of
credit to sectors
underserved by
commercial banking.
Issuer Website:
www.nafin.com
Primary Credit
Analyst:
Elena Enciso
Mexico City
(52) 55-5081-4406
elena.enciso@
spglobal.com
Secondary Credit
Analyst:
Alfredo E Calvo
Mexico City
(52) 55-5081-4436
alfredo.calvo@
spglobal.com
Ratings At End June
2015:
BBB+/Stable/A-2
Ratings At End June
2008:
N/A
spglobal.com/ratings
Summary Analysis
national and international counterparties.
Also, we believe that available stable funding is
supported by the longer tenures the bank has in
its funding sources. NAFIN's funding sources are
lines at national and multilateral international
banks, as well as alternative funding sources
in the market, which provide stability and cover
gaps in the term, interest rate, and exchange
rate. The bank has successfully issued longterm notes, which has allowed it to better
match its balance in terms of asset-liability
management, and shows its ability to access
long-term debt markets. It has also been very
successful in the placement of securities in the
domestic and international markets.
NAFIN's liquidity is adequate, in our view,
because of its manageable debt maturity
profile. Additionally, NAFIN has mechanisms
in place to generate liquidity quickly. Aside
from its prudent liquidity policy, the federal
government guarantee provides financial
flexibility to NAFIN that will allow it to
refinance its short-term debt relatively easily.
Outlook
The negative outlook on NAFIN reflects the
outlook on Mexico, given our opinion of an
almost certain likelihood of extraordinary
government support to NAFIN in case of
financial stress. As a result, our ratings
Nacional Financiera SNC (NAFIN): Selected Indicators
Period
Currency
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
MXN
MXN
MXN
MXN
Denomination
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
13.6
14.6
15.0
15.8
Leverage ratio (%)
6.7
6.2
6.4
5.9
Total adjusted capital/adjusted assets (%)
6.7
6.2
6.4
5.9
Net nonperforming assets/customer loans + other real estate owned (%)
-1.7
-1.4
-1.5
-2.1
Net interest income/operating revenues (%)
68.6
55.9
42.7
69.2
0.3
0.4
0.5
0.4
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
20.8
24.0
26.8
32.8
246.1
206.3
199.8
1429.5
Growth in customer loans (%)
14.2
24.6
4.6
-1.8
Growth in loss reserves (%)
18.9
12.9
39.3
5.7
Loan loss reserves/gross nonperforming assets (%)
-1.3
10.7
0.8
2.7
YoY growth in loan loss provisions (%)
Growth in adjusted assets (%)
-21.3
14.2
536.5
-76.9
Stable funding ratio (%)
96.2
92.5
96.9
95.5
Short-term wholesale funding/total wholesale funding (%)
74.2
85.2
91.7
95.4
Total wholesale funding / funding base (%)
64.5
67.5
66.7
68.8
Short-term wholesale funding/funding base (%)
47.9
57.5
61.1
65.6
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
125
Summary Analysis
on NAFIN will move in tandem with those on
the sovereign. We expect NAFIN to maintain
its critical role for, and integral link to, the
government in the implementation and execution
of public policies to promote the national
development of micro, small and midsize
enterprises in Mexico.
We could downgrade NAFIN in the next 24
months if we take a negative rating action on
Mexico. Given the almost certain likelihood of
extraordinary government support, the issuer
credit ratings on the bank remain unchanged and
will move in tandem with those on Mexico.
Given NAFIN's status as GRE, its ratings will
move in tandem with those on Mexico. Therefore,
an upgrade of Mexico would result in a similar
rating action on NAFIN, as long as our view of
government support doesn't change.
Nacional Financiera SNC (NAFIN): Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
MXN
MXN
MXN
MXN
Mil.
Mil.
Mil.
Mil.
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
20833
22677
17454
19435
179333
207692
205749
206356
0
0
0
0
171702
150299
120602
115345
4703
3955
3504
2516
Customer loans (net)
166999
146344
117098
112829
Earning assets
351348
362563
326351
321701
0
0
3799
2879
Equity interests/participations (nonfinancial)
All other assets
3227
1169
1120
1187
Total assets
384828
389750
352037
349074
Adjusted assets
384828
389750
352037
349074
125734
116610
108913
101857
Liabilities (category name - no data)
Total deposits
Other borrowings
92648
61152
41364
35316
Other liabilities
5298
6420
2429
1952
Total Liabilities
359472
365666
329464
328415
Total equity
25356
24084
22573
20659
Common shareholders' equity (reported)
24096
22942
21415
19611
Nonperforming assets
1911
1917
1754
176
Equity (category name - no data)
Other items
Preprovision operating income
2945
3886
3601
1998
Credit loss provisions (net new)
1253
1592
1394
219
Net income before extraordinaries
1254
1648
1725
1358
0
0
0
0
Extraordinary income
126
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
National Asset
Management Agency (NAMA)
Ratings:
A+/Stable/A-1
Rationale
SACP:
N/A
The rating on NAMA reflects our view of an almost
certain likelihood of NAMA receiving extraordinary
government support from Ireland, in accordance
with our criteria for government-related entities
(GRE), based on NAMA's:
––Critical role for the Irish government and its
public policy mandate; and
––Integral link with the Irish government,
demonstrated by its ownership and governance
structure.
NAMA was established on a statutory basis under
the aegis of the National Treasury Management
Agency (NTMA). Its role is to support distressed
Irish banks by acquiring banks' "bad" loans in
exchange for Irish government-guaranteed senior
bonds. NAMA funds the purchase price of the
distressed assets by issuing Irish governmentguaranteed senior debt securities for 95% of
the purchase price and (non-state-guaranteed)
subordinated debt securities for the remaining
5%.
NAMA has a 49% shareholding in National Asset
Management Agency Investment Ltd. (NAMAIL).
The other 51% of shares in NAMAIL are held by
private investors. National Asset Management
Limited (NAML) is a wholly owned subsidiary of
NAMAIL. In our view, one of the reasons why the
government established NAMA and its subsidiary
companies was to keep NAMA debt issuance
outside of the Maastricht definition of gross
general government debt. However, we view NAMA
and its subsidiary companies as an extension
of the Irish central government and include our
estimates of NAMA debt issuance in our forecasts
for gross general government.
Central Government Agencies 2016 | September 2016
Last Ratings Action
And Date
Ratings affirmed on
Dec. 9, 2015
Although we expect NAMA to be eventually
wound down once Ireland's bank resolution is
completed and it is no longer required, we do
not consider this as diminishing its policy role.
NAMA has repaid €22.1 billion of its senior bonds
as of the end of October 2015. We expect NAMA
to repay all its senior debt by the end of 2018.
We believe the likelihood that NAMA will remit a
residual gain to the government when it winds up
its operations exceeds the likelihood that it will
incur a shortfall.
The Irish finance minister appoints seven of
NAMA's board members, underlining the integral
link NAMA has with the government. NAMA is
also accountable to the committee of public
accounts, and the Office of the Comptroller and
Auditor General (the government's independent
audit body) reviews its accounts. Government
oversight of NAMA includes publicly available
quarterly, semiannual, and annual reports on its
operations, acquired assets and their status, and
financial performance. Moreover, NTMA provides
NAMA with business and support services and
systems, and assigns staff to NAMA as deemed
necessary.
In October 2015, in conjunction with the
2016 budget, NAMA announced a program to
deliver up to 20,000 units of housing, using the
residential sites controlled by its debtors and
receivers. We understand the program will be
funded by NAMA's own cash resources and will
have no impact on the debt repayment schedule.
This program is expected to complete by 2020,
the same year NAMA would have repaid all its
outstanding liabilities.
Outlook
The stable outlook reflects the outlook on Ireland.
We could raise or lower the ratings on NAMA if we
raised or lowered the ratings on Ireland.
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
NAMA was set up to
support distressed
Irish banks by
acquiring banks' "bad"
loans in exchange
for Irish government
guaranteed senior
bonds. NAMA funds
the purchase price
of the distressed
assets by issuing
Irish government
guaranteed senior
debt securities for
95% of the purchase
price and (nonstate-guaranteed)
subordinated debt
securities for the
remaining 5%.
Issuer Website:
www.nama.ie
Primary Credit
Analyst:
Eileen Zhang, CFA
London
(44) 20-7176-7105
eileen.zhang@
spglobal.com
Secondary Credit
Analyst:
Frank Gill
Madrid
(34) 91-788-7213
frank.gill@spglobal.
com
Ratings at end
June 2015:
A+/Stable/A-1
Ratings At End June
2008:
N/A
spglobal.com/ratings
127
Summary Analysis
We could also lower the ratings on NAMA
if we changed our view of the likelihood of
extraordinary government support, which would
follow if we considered that NAMA's policy role or
links with the Irish government were weakening.
If NAMA's residential building program extends
beyond 2020 and results in what we see as a
changed policy role from its original role, we
would review the likelihood of extraordinary
government support. We currently consider any
such changes to be unlikely.
National Asset Management Agency: Selected Indicators
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
27.1
7.8
2.1
1.5
1.7
Total adjusted capital/adjusted assets (%)
27.0
7.7
2.1
1.5
1.7
Net nonperforming assets/customer loans + other real estate owned (%)
N/A
N/A
N/A
N/A
N/A
134.1
128.9
117.6
118.1
90.0
2.3
1.1
-0.5
0.3
N/A
89.8
34.8
-20.5
11.9
N/A
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
N/A
N/A
N/A
N/A
N/A
-39.0
-52.4
36.1
-8.2
-3.7
Growth in loss reserves (%)
-29.7
-14.7
26.4
18.6
85.3
Growth in adjusted assets (%)
-26.2
-57.1
32.9
-11.2
3.4
-150.4
-81.4
76.6
-59.1
-14.7
N/A
N/A
N/A
N/A
N/A
Growth in customer loans (%)
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
128
Central Government Agencies 2016 | September 2016
33.2
33.1
33.0
33.1
33.1
100.0
100.0
100.0
100.0
100.0
33.2
33.1
33.0
33.1
33.1
spglobal.com/ratings
Summary Analysis
National Asset Management Agency: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
3489
1934
4334
3465
3756
48
36
152
258
500
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
0
0
0
0
0
10292
16881
35439
26040
28359
Loan loss reserves
2476
3521
4125
3263
2751
Customer loans (net)
7816
13360
31314
22776
25607
10427
17002
35669
26377
29268
0
0
0
0
0
Earning assets
Equity interests/participations (nonfinancial)
58
145
226
371
349
Total assets
All other assets
11566
15572
36225
27228
30669
Adjusted assets
11457
15534
36186
27221
30662
21
20
25
36
60
Liabilities (category name - no data)
Total deposits
Other borrowings
8090
13590
34618
25440
29106
Other liabilities
249
723
773
1340
981
Total Liabilities
8360
14334
35415
26816
30147
Total equity
3206
1239
810
412
521
Common shareholders' equity (reported)
3155
1239
810
412
521
Nonperforming assets
N/A
N/A
N/A
N/A
N/A
Preprovision operating income
182
363
692
638
729
Equity (category name - no data)
Other items
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
Central Government Agencies 2016 | September 2016
-86
170
914
518
1267
1775
458
214
232
247
0
0
0
0
0
spglobal.com/ratings
129
Summary Analysis
Nederlandse Financierings-Maatschappij
voor Ontwikkelingslanden N.V. (FMO)
Rationale
We believe that there is an almost certain likelihood
that FMO would receive timely and sufficient
extraordinary support from the Dutch government
in the event of financial distress. As a result, we
equalize our long-term issuer credit rating on FMO
with that on The Netherlands. In accordance with
our criteria for government-related entities, our
rating approach factors in our view of FMO's:
––Critical role as the key government vehicle for
promoting private-sector growth in developing
countries, an important public policy goal in The
Netherlands; and
––Integral link with the Dutch government. The
ratings reflect the 51% government ownership
of, and strong sovereign support for FMO, based
on the government's maintenance obligation on
FMO's operations, its liquidity injections, and its
commitment to preserve FMO's solvency, as well
as a track record of such support.
The 1998 agreement between FMO and the
government formally codified sovereign support
to FMO. Under Article 8 of the agreement, the
government is legally required to enable FMO to
meet its obligations on time by providing liquidity.
The duration of the agreement is indefinite and
its termination requires 12 years' notice by either
party. The Netherlands' long-term commitment to,
and support of, FMO is further demonstrated by
the sovereign's obligation in most circumstances
to safeguard the company's solvency (Article 7 of
the agreement). We understand that, although the
government does not explicitly guarantee FMO's
individual obligations, it views its maintenance
guarantee on FMO's operations as equivalent to
an explicit guarantee. FMO's creditors have no
direct recourse to the Dutch State. Rather, the
government's obligation is to FMO. In the context of
the assessment of the likelihood of extraordinary
130
Central Government Agencies 2016 | September 2016
state support, it is important to note that the
Dutch State has an interest of more than 90% of
shareholder's equity, as it is entitled to a major
part of FMO's reserves.
FMO supports businesses and financial
institutions in developing countries by
providing capital and skills, which is part of the
general policy of The Netherlands' Ministry of
Development Cooperation and therefore qualifies
as a strategically important activity. It does so by
arranging loans, equity investments, guarantees,
and other investment promotion activities. In
addition, FMO manages several off-balancesheet development funds on behalf of, and at the
risk of, the Dutch government.
FMO manages the following government funds:
financing of Dutch small and midsize enterprises
(SMEs) that invest in developing countries, a fund
reaching out to SMEs via financial institutions,
earmarked funds for infrastructure projects in
low-income countries, a fund financing energy
projects, and capacity development. The latter
enables targeted access to know-how, bundled
to meet a company's full organizational needs, is
financed by the Dutch Ministry for Development
Cooperation, and stimulates technical
cooperation between developing country
companies and enterprises in industrialized
nations. The Dutch government allocated
additional funds to FMO in 2013, highlighting
FMO's importance in achieving government
development policy.
Ratings:
AAA/Stable/A-1+
Last Ratings Action
And Date
Ratings raised on
Nov. 25, 2015
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
The entity fullfils
an important policy
goal for the Dutch
government by
promoting privatesector growth in
developing countries.
Issuer Website:
www.fmo.nl
Primary Credit
Analyst:
Marko Mrsnik
Madrid
(34) 91-389-6953
marko.mrsnik@
spglobal.com
Secondary Credit
Analyst:
Frank Gill
Madrid
(34) 91-788-7213
frank.gill@
spglobal.com
Ratings at end
June 2015:
AA+/Positive/A-1+
Ratings at end
June 2008:
AAA/Stable/A-1+
According to FMO's dividend policy, the
shareholders, including the government, may
now take an increased dividend of up to 100%
of distributable profit (about 5% of total profit),
compared with 40%-60% previously. Between
2007 and 2013, FMO retained on average about
97% of its annual profits as capital.
spglobal.com/ratings
Summary Analysis
Given the nature of FMO's business and the
high level of equity and mezzanine financing,
its financial results are fairly volatile, in our
opinion, especially in an uncertain world growth
environment. Based on FMO's track record of
managing emerging market risks, we expect
that the company will remain profitable, despite
what we may consider to be a weakening global
economic environment.
the program's implementation. It is estimated
that the inclusion of the securities did not have
a significant impact on FMO's already favorable
borrowing conditions, partly explained by
the fact that slightly more than one-third of
the funding portfolio is denominated in euro.
Nevertheless, we believe that the inclusion of
FMO's securities in the ECB's PSPP benefits its
funding options.
In 2014, FMO received the full banking license
it had applied for from the Dutch Central
Bank, further improving its access to the
international capital markets and widening its
financing options. FMO can now fully benefit
from emergency monetary policy measures
that the European Central Bank (ECB) adopts.
More recently, in the context of the ECB's
Public Sector Purchase Program (PSPP),
triggered in March 2015, securities issued by
FMO became eligible for the Eurosystem's
expanded asset purchase at an early stage of
The stable outlook on FMO mirrors that on The
Netherlands and also reflects our expectation
that the 1998 agreement with the Dutch State
will remain in force for the foreseeable future.
If we receive new information that would lead
us to reassess FMO's integral link with and
critical role for the Dutch government, in turn
leading to an assessment of a lower probability
of extraordinary government support, we could
lower the long-term rating on FMO to below that
on The Netherlands.
Outlook
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.: Selected Indicators
Period
Currency
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
23.6
21.3
24.7
26.1
26.7
Leverage ratio (%)
25.0
27.2
29.4
30.4
31.2
Total adjusted capital/adjusted assets (%)
24.3
26.3
28.2
29.0
29.4
Net nonperforming assets/customer loans + other real estate owned (%)
-0.9
-1.8
-3.6
-7.6
-8.5
Net interest income/operating revenues (%)
77.2
80.2
66.2
67.5
86.8
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
Growth in loss reserves (%)
2.1
1.8
2.2
2.6
1.8
59.2
58.9
57.8
63.0
55.2
111.3
124.3
153.3
283.7
311.9
10.8
28.3
4.5
8.1
13.0
2.9
16.4
-6.8
2.7
6.7
18.8
14.6
11.2
10.0
17.5
YoY growth in loan loss provisions (%)
N.M.
N.M.
N.M.
N.M.
N.M.
Stable funding ratio (%)
113.9
98.9
116.8
115.4
118.8
Growth in adjusted assets (%)
Short-term wholesale funding/total wholesale funding (%)
39.8
51.3
44.2
42.3
38.1
Total wholesale funding / funding base (%)
98.6
94.2
94.2
93.2
90.8
Short-term wholesale funding/funding base (%)
39.3
48.4
41.7
39.5
34.6
spglobal.com/ratings
131
Central Government Agencies 2016 | September 2016
Summary Analysis
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
1622
1127
1132
701
541
Securities
2079
1718
1608
1620
1420
0
0
0
0
0
4677
4219
3290
3148
2912
370
359
309
331
323
Period
Currency
Denomination
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Customer loans (net)
4307
3860
2981
2817
2590
Earning assets
8037
6888
5873
5083
4570
Equity interests/participations (nonfinancial)
0
0
0
0
0
28
26
57
32
41
Total assets
8421
7088
6184
5564
5059
Adjusted assets
8421
7088
6184
5564
5059
76
342
304
268
558
5348
4197
3610
3292
2679
All other assets
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
487
411
308
188
158
Total Liabilities
5910
4950
4221
3748
3395
Total equity
2511
2138
1963
1815
1665
Common shareholders' equity (reported)
2510
2138
1963
1815
1664
Nonperforming assets
332
289
201
117
103
Preprovision operating income
215
149
171
171
118
Equity (category name - no data)
Other items
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
132
Central Government Agencies 2016 | September 2016
0
0
0
0
0
174
124
133
145
93
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
Oesterreichische
Entwicklungsbank AG (OeEB)
Rationale
The ratings reflect our opinion that there is
an almost certain likelihood that the Austrian
government and OeEB's parent Oesterreichische
Kontrollbank AG (OKB) would provide timely
and sufficient extraordinary support to OeEB
in the event of financial distress. Our view of
an almost certain likelihood of extraordinary
government and parental support is based on
our assessment of OeEB's:
––Critical role for Austria, given that it was
created for and operates only on behalf of
the government. OKB established OeEB on
the overnment's mandate to provide banking
services for business transactions that
commercial financial institutions are unwilling
or unable to provide. OeEB is the sole agent
for financing private-sector investments
in developing and transition countries,
supported by government guarantees that
mitigate political and economic risks for its
client-related business. In this respect, OeEB
supports the Austrian government in meeting
international obligations for development
cooperation; and
––Integral link with the Austrian government,
given the bank's public mandate and the
government's provision of asset guarantees
and general propensity to intervene in favor of
its agents. This link extends to OKB, which is
intended to provide funding to OeEB from its
own common funding sources that generally
benefit from unconditional, irrevocable, and
timely guarantees from Austria.
OeEB has a long history of close integration
with its parent and cooperation with the
Austrian government, including payment
of guarantee claims. This has alleviated
our previous concerns that the guarantee
Central Government Agencies 2016 | September 2016
Ratings:
AA+/Stable/A-1+
Last Ratings Action
And Date
Ratings affirmed on
Jul. 21, 2016
framework between OeEB and the government
does not ensure timely payment and excludes
the government from liability if OeEB had
prior knowledge of a loss or committed gross
negligence, misconduct, or fraud. Given its
integration and cooperation with the community
of multinational and national development banks,
OeEB has become a key instrument through which
the Austrian government meets its international
obligations on development cooperation.
We currently have no doubt about the Austrian
government's willingness to support OeEB, as
a key government-related entity, in practically
all circumstances or about the government's
propensity to support OeEB. In addition, the
government has sufficient financial resources to
support OeEB.
The government does not own OeEB or OKB. It
is, however, closely involved in OeEB's affairs
through a committee and advisory board. The
ministry of finance grants explicit guarantees
for each transaction, and the committee and
advisory board approve all of OeEB's investments
and government guarantees. The government has
contractually agreed to reimburse any losses that
OeEB may incur. Although the underlying contract
can be changed only by mutual agreement, we
think that, in reality, the government can change
the contract at its discretion. Should this occur,
we would still anticipate that the government
would honor all prior contractual obligations.
OeEB's operations include the provision of longterm investment financing in the form of loans or
equity funding on trust, and to provide advisory
programs to support projects in developing
countries. It also offers advisory services to help
clients identify, implement, and monitor projects
and investments. We understand that OeEB plans
to increase its investment portfolio by about
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
OeEB is the sole agent
for financing privatesector investments
in developing
and transition
countries, supported
by government
guarantees that
mitigate political
and economic risks
for its client-related
business.
Issuer Website:
www.oe-eb.at
Primary Credit
Analyst:
Ludwig Heinz
(49) 69-33-999-246
ludwig.heinz@
spglobal.com
Secondary Credit
Analyst:
Alois Strasser
Frankfurt
(49) 69-33-999-240
alois.strasser@
spglobal.com
Ratings At End June
2015:
AA+/Stable/A-1+
Ratings At End June
2008:
N/A
spglobal.com/ratings
133
Summary Analysis
€210 million in 2016 and €225 million in 2017, with
increasing amounts compared with past years.
We expect most of OeEB's funding to come
from OKB, apart from funding-entrusted equity
investments, which are covered by government
sources. Austria guarantees OeEB's assets
related to lending and investment business,
but we believe there is potential for short-term
mismatches if a client were to default. We
understand, however, that OKB is willing to bridge
temporary mismatches. We also see a strong
incentive for OKB to provide OeEB with funding
because doing so could prevent damage to its own
reputation. We consider OKB's capacity to provide
funding to be very high because OeEB's potential
liquidity needs are, in our view, insignificant
relative to the available liquidity on OKB's balance
sheet. OeEB has a reduced banking license, which
allows it access to European Central Bank (ECB)
funding. Because of its ownership structure, OeEB
is not included in the ECB's quantitative easing list.
Outlook
The stable outlook reflects that on the sovereign
and our opinion that OeEB will continue to play
a critical role in the Austrian government's
development policy. This importance is
underscored by the inclusion of OeEB's
investment financings in the Export Guarantees
Act and its new role as the government's trustee
for equity investments. Given its mandate
Oesterreichische Entwicklungsbank AG: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
2.9
2.2
2.1
2.1
3.0
Period
Currency
Total adjusted capital/adjusted assets (%)
2.9
2.2
2.1
2.1
3.0
Net nonperforming assets/customer loans + other real estate owned (%)
N/A
N/A
N/A
N/A
N/A
84.8
79.1
64.2
44.8
16.1
0.9
0.7
0.5
0.4
0.6
Core earnings/operating revenues (%)
42.5
37.0
25.8
20.8
23.0
Loan loss reserves/gross nonperforming assets (%)
N/A
N/A
N/A
N/A
N/A
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Growth in customer loans (%)
-0.6
26.0
69.2
94.9
6096.6
-12.5
-20.0
0.0
70.0
N.M.
10.1
38.1
26.1
53.4
53.6
YoY growth in loan loss provisions (%)
N.M.
N.M.
N.M.
N.M.
N.M.
Stable funding ratio (%)
89.3
88.2
91.1
N/A
N/A
Growth in loss reserves (%)
Growth in adjusted assets (%)
Short-term wholesale funding/total wholesale funding (%)
14.5
7.2
3.6
100.0
100.0
Total wholesale funding / funding base (%)
99.3
99.2
100.0
100.0
100.0
Short-term wholesale funding/funding base (%)
14.4
7.1
3.6
100.0
100.0
134
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Oesterreichische Entwicklungsbank AG: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Assets (category name - no data)
Cash and money market instruments
121
63
48
61
25
Securities
135
124
92
79
70
Loans to banks (net)
229
245
166
133
87
Customer loans (gross)
131
132
105
62
32
Loan loss reserves
1
1
1
1
1
Customer loans (net)
130
131
104
61
31
Earning assets
617
564
411
335
215
0
0
0
0
0
Equity interests/participations (nonfinancial)
All other assets
50
42
28
13
12
Total assets
666
605
438
347
226
Adjusted assets
666
605
438
347
226
548
503
360
271
186
Liabilities (category name - no data)
Total deposits
Other borrowings
0
0
0
0
0
Other liabilities
98
89
69
69
33
Total Liabilities
646
591
428
340
220
Total equity
19
13
9
7
7
Common shareholders' equity (reported)
19
13
9
7
7
N/A
N/A
N/A
N/A
N/A
Preprovision operating income
8
5
3
2
2
Credit loss provisions (net new)
0
0
0
0
0
Net income before extraordinaries
6
4
2
1
1
Extraordinary income
0
0
0
0
0
Equity (category name - no data)
Other items
Nonperforming assets
to operate as the sole agent for financing
commercial development projects, OeEB will likely
maintain its integral link with the government.
Guarantees against political and economic risks
strengthen this link, in our view, and reflect
OeEB's critical role for and integral link with OKB,
its sole owner and lender of last resort. We do not
expect that the critical role and integral link will
change over the next 24 months.
Central Government Agencies 2016 | September 2016
We could take a negative rating action if OeEB's
critical role for or its integral link with the Austrian
government were to weaken, if we observed a
weakening relationship with its owner OKB, or if we
were to take a negative rating action on Austria.
Additionally, we could raise the ratings if Austria's
credit quality were to improve and the likelihood of
support for OeEB remained almost certain.
spglobal.com/ratings
135
Summary Analysis
Oesterreichische Kontrollbank AG (OKB)
Rationale
The ratings on OKB reflect our opinion that there
is an almost certain likelihood that the Republic
of Austria would provide timely and sufficient
extraordinary support to the bank in the event of
financial distress. This is based on our assessment
of OKB's:
its propensity to support OKB. In addition, the
government has sufficient financial resources to
support OKB.
OKB is not owned by the government, but by
all prominent Austrian financial institutions,
which we believe forms a stable ownership
structure for the bank. The minister of finance,
however, appoints a commissioner and deputy
––Critical role for Austria as its sole agent for the
commissioner who participate in the bank's
administration of the country's export guarantee
program and its provision of export financings. In shareholder and supervisory board meetings. Most
of OKB's activities are governed by specific laws,
this respect, OKB serves an important sector of
the export-dependent Austrian economy. This role and the government explicitly guarantees almost
all of OKB's debt. Because the majority of OKB's
is further underpinned by OKB's assumption in
2008 of another government mandate through its lending is collateralized by export guarantees,
mainly under Austria's export guarantee program,
subsidiary Oesterreichische Entwicklungsbank
the government effectively guarantees most of
AG; and
OKB's assets as well. In addition, we understand
that neither the government nor OKB intends
––Integral link with the government, which plays
to change the bank's business model despite a
a major role in defining the bank's strategy and
decline in business volume and core earnings. We
provides unconditional, irrevocable, and timely
are convinced that the government will support
guarantees for its bond issues. In addition,
the bank over and above the provision of state
the government effectively guarantees most
guarantees as long as OKB's focus on export
of OKB's assets and provides continuous
promotion does not change. OKB also issues
support by servicing drawn asset guarantees.
unguaranteed debt (French certificates of deposit)
Even without government ownership, the state
and intends to increase unguaranteed mediumremains involved in OKB through government
term notes issuance (Kassenobligationen), which
commissioners that participate in the bank's
would not, in our opinion, affect the credit quality
shareholder and supervisory board meetings.
of OKB, provided that such issuance remains
within manageable risk limits and for the benefit
The ratings also reflect our view of OKB's prudent
management and stable financial profile, including of liquidity management of OKB's treasury,
supporting OKB's export credit business.
an extremely low-risk loan portfolio, almost
entirely comprising loans granted under OKB's
As of year-end 2015, OKB's assets totaled €28.8
export financing scheme. If OKB calls on the
billion. Although this total is 19% less than in
government to honor the guarantee on a loan, it
2010, it is 3% higher than in 2014. The overall
has to transfer the underlying bank receivable
decline primarily reflects a change in the structure
to the government, which will leave OKB with no
of export financing, mainly linked to financing
nonperforming loans.
of foreign direct investments (FDIs) by Austrian
companies abroad after the financial crisis, which
We are confident about the Austrian government's
have now been repaid. Although we believe the
willingness to support OKB, one of its key
financing of these FDIs justifies the reduction
government-related entities, in practically all
in the balance sheet, we acknowledge OKB's
circumstances, and we have no doubts regarding
136
Central Government Agencies 2016 | September 2016
Ratings:
AA+/Stable/A-1+
Last Ratings Action
And Date
Ratings affirmed on
Jul. 21, 2016
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
OKB is sole agent for
the administration of
the country's export
guarantee program
and its provision of
export financing. In
this respect, OKB
serves an important
sector of the exportdependent Austrian
economy.
Issuer Website:
www.oekb.at
Primary Credit
Analyst:
Alois Strasser
Frankfurt
(49) 69-33-999-240
alois.strasser@
spglobal.com
Secondary Credit
Analyst:
Ludwig Heinz
Frankfurt
(49) 69-33-999-246
ludwig.heinz@
spglobal.com
Ratings At End June
2015:
AA+/Stable/A-1+
Ratings At End June
2008:
AAA/Stable/A-1+
spglobal.com/ratings
Summary Analysis
continued significance in export financing, which
is further highlighted by the amount of guarantees
it has granted on Austria's behalf. In 2015, OKB
administered €3.8 billion in new export guarantees
for Austria, slightly below 2014 levels. However,
the overall volume of extended export guarantees
declined further as expiring guarantee volumes
exceeded new guarantee issuances.
Outlook
OKB could provide its own guarantees without
back-guarantees of the government, which, if
provided to a limited extent and thoroughly risk
assessed, would not harm the credit quality of OKB.
One of our baseline assumptions is that OKB's and
the government's strategies are aligned and focus
on export credit. If we observed stronger deviations
from the government's strategy, which could result
in lower government support due to increasing
commercial risk in OKB's balance sheet, we could
negatively reassess our view of the likelihood of
government support for OKB.
We could lower the ratings if we were to
conclude that the government was about to
change its relationship with OKB or withdraw
its support, including the guarantees. Also,
if the bank lost its monopoly position as the
government's agency for the export guarantee
program, we would consider a downgrade.
Additionally, if OKB were to deviate from its
current government-approved strategy and
become more involved in its own commercial
risk-related business, we could reassess OKB's
role for and link with the government.
The stable outlook on OKB reflects that on Austria
and our view that, given the legal framework and
irrevocable guarantee on most of the bank's debt,
OKB's role for and link with the government are
unlikely to change over the next two years. We
therefore expect our ratings and outlook on OKB
to move in line with those on Austria.
Oesterreichische Kontrollbank AG: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
83.1
67.4
113.8
113.8
122.8
3.2
3.0
2.7
2.3
1.8
Period
Currency
Leverage ratio (%)
Total adjusted capital/adjusted assets (%)
2.6
2.6
2.4
2.0
1.6
Net nonperforming assets/customer loans + other real estate owned (%)
0.0
0.0
0.0
0.0
0.0
55.2
49.1
53.7
50.5
65.2
0.2
0.2
0.2
0.3
0.1
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
Core earnings/operating revenues (%)
32.8
40.1
36.5
45.1
34.7
100.0
93.8
80.7
70.1
99.6
Growth in customer loans (%)
-1.9
1.4
-2.5
8.3
0.3
Growth in loss reserves (%)
10.7
19.3
17.5
54.8
15.6
2.8
-3.3
-11.6
-13.7
6.1
Loan loss reserves/gross nonperforming assets (%)
Growth in adjusted assets (%)
YoY growth in loan loss provisions (%)
-34.1
-37.2
2.8
291.7
-76.0
Stable funding ratio (%)
131.4
118.2
103.8
119.2
103.8
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
39.4
39.9
41.6
36.6
45.7
100.0
100.0
100.0
100.0
100.0
39.4
39.9
41.6
36.6
45.7
spglobal.com/ratings
137
Summary Analysis
Oesterreichische Kontrollbank AG: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
8308
8663
9055
10633
12687
Period
Currency
Denomination
Assets (category name - no data)
Securities
2602
1789
1612
1490
1468
Loans to banks (net)
9790
10920
12830
14040
16636
Customer loans (gross)
1481
1510
1489
1527
1410
1
1
0
0
0
Loan loss reserves
Customer loans (net)
Earning assets
Equity interests/participations (nonfinancial)
All other assets
1481
1510
1489
1526
1409
21959
22611
24465
27566
31615
0
0
0
0
0
172
152
133
116
121
Total assets
28776
28002
28964
32768
37978
Adjusted assets
28774
28000
28963
32767
37977
1834
1328
1056
2367
1559
23625
23541
24590
27282
33350
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
2571
2415
2634
2457
2470
Total Liabilities
28030
27283
28280
32106
37379
Total equity
746
718
684
662
599
Common shareholders' equity (reported)
742
714
680
658
595
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
138
Central Government Agencies 2016 | September 2016
1
1
1
1
0
61
84
71
111
65
0
0
0
0
0
47
65
55
85
50
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
SID Bank
Ratings:
A/Stable/A-1
Rationale
Last Ratings Action
And Date
Ratings raised on Jun.
24, 2016
The ratings on state-owned SID Bank reflect
our view of an almost certain likelihood that
the bank would receive timely and sufficient
extraordinary support from the Slovenian
government in the event of financial distress.
In accordance with our criteria for governmentrelated entities, we base our view of timely and
sufficient extraordinary support on SID Bank's:
––Critical role in implementing the government's
economic policies, since SID Bank is Slovenia's
flagship development and export promotion
bank and the country's fourth-largest financial
institution. The government uses SID Bank
to help achieve its economic policy goals,
for instance through subsidized loan and
insurance programs; and
––Integral link with the government, which fully
owns SID Bank. The bank is governed on the
basis of the Slovene Export and Development
Bank Act, a specially designated law, and
operates under the coordinated supervision of
the Bank of Slovenia, the Ministry of Finance,
and the Ministry of Economic Development
and Technology.
In addition, SID Bank enjoys a state guarantee
that is irrevocable and valid for all its debt
obligations. The guarantee is the strongest
applied under Slovenian law, and it supports our
assumption of an almost certain likelihood of
extraordinary government support.
SID Bank uses its shareholder capital and
wholesale borrowing to channel financing-over
60% through the commercial banking system
versus direct lending-for infrastructure, small
and midsize enterprises, housing, and other
projects in Slovenia that are not sufficiently
serviced by the local banking market. In
addition, the bank provides financing, insurance,
Central Government Agencies 2016 | September 2016
and guarantees for Slovenian investors and
exporters. Although SID Bank is not a deposittaking institution, in practice, it enjoys the
stability of long-term funding, with a stable
funding ratio of 144% at year-end 2015, in light
of sovereign support and multilateral funding
sources. SID Bank reported total assets of €3.4
billion at year-end 2015.
SACP:
N/A
LOS:
Almost certain
Role:
Critical
SID Bank is 100% owned by the government and
it is a joint stock company under corporate law.
The government determines the composition of
the supervisory board, which in turn appoints
the management board. In addition, the bank
is defined as a financial institution and is
therefore under the supervision of the Bank
of Slovenia and the securities market agency.
SID Bank's relatively large size led European
authorities to classify it as a systemically
important institution in 2014 (but not in 2015).
Consequently, SID Bank was part of the
European Central Bank's Asset Quality Review
in 2014, which estimated SID Bank to have a
comfortable capital ratio (common equity tier
1) of 14.45% in an adverse scenario. Marketable
debt instruments issued by SID Bank are
eligible for the Eurosystem's expanded asset
purchase program of €60 billion in monthly
purchases.
SID Bank has remained profitable, albeit on
a modest scale, with a return on equity of
approximately 2.2% on average over the past
five years. This is not surprising, given its public
policy mandates, and is comparable with that
of other development banks. Small profits have
also kept the bank's capital base stable during
the same period.
Link:
Integral
Key Policy Role:
SID Bank is Slovenia's
flagship development
and export promotion
bank and the country's
fourth-largest
financial institution.
SID Bank is key for the
government to achieve
its economic policy
goals, for instance
through subsidized
loan and insurance
programs.
Issuer Website:
www.sid.si
Primary Credit
Analyst:
Aarti Sakhuja
Madrid
(34) 91-788-7207
aarti.sakhuja@
spglobal.com
Secondary Credit
Analyst:
Magar Kouyoumdjian
London
(44) 20-7176-7217
magar.kouyoumdjian@
spglobal.com
Ratings at end
June 2015:
A-/Stable/A-2
Ratings At End June
2008:
N/A
SID Bank's creditworthiness is linked to that of
the sovereign. We don't assess a stand-alone
credit profile for SID Bank because we view the
likelihood of extraordinary government support
for the bank as almost certain. However, we
spglobal.com/ratings
139
Summary Analysis
estimate that the bank's underlying credit
quality, absent extraordinary support, is in
the 'b' category. As such, we consider that the
likelihood of government support is not subject
to transition risk.
Outlook
The stable outlook on SID Bank reflects that on
Slovenia. We equalize our ratings on SID Bank
with those on the sovereign. Consequently, any
future outlook revision or rating action on the
sovereign would result in a corresponding change
in the outlook or ratings on SID Bank.
Beyond any sovereign rating action we may
take, we could lower the ratings on SID Bank
if, in our view, the bank's role for or link with
the government had weakened. This could
occur if we perceived that the bank's mission
had become less important, or if there were
any adverse statutory changes to SID Bank's
operating framework or to the financial support
mechanisms currently in place.
SID Bank: Selected Indicators
Period
Currency
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
29.1
25.8
16.1
N/A
N/A
Leverage ratio (%)
11.6
10.1
9.4
8.6
8.5
Total adjusted capital/adjusted assets (%)
11.6
10.0
9.4
8.5
8.4
Net nonperforming assets/customer loans + other real estate owned (%)
54.5
68.5
59.6
32.9
41.1
Net interest income/operating revenues (%)
58.4
71.6
65.4
63.8
82.8
0.4
0.1
0.1
0.2
0.3
Core earnings/operating revenues (%)
Core earnings/ Adjusted assets (%)
30.2
7.5
5.6
6.7
15.5
Loan loss reserves/gross nonperforming assets (%)
37.6
33.3
37.9
39.8
26.4
Growth in customer loans (%)
-5.9
4.4
-8.9
-3.4
-6.7
Growth in loss reserves (%)
-9.0
11.0
25.4
31.1
17.9
Growth in adjusted assets (%)
-10.6
-5.6
-9.7
0.9
3.2
YoY growth in loan loss provisions (%)
-78.3
-44.8
-23.2
82.4
49.6
Stable funding ratio (%)
143.8
131.6
111.2
109.2
94.6
19.3
23.2
13.8
10.0
15.9
100.0
100.0
100.0
100.0
100.0
19.3
23.2
13.8
10.0
15.9
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
140
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
SID Bank: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
€
€
€
€
€
Mil.
Mil.
Mil.
Mil.
Mil.
691
924
180
440
218
Assets (category name - no data)
Cash and money market instruments
Securities
962
733
365
334
244
Loans to banks (net)
940
1270
2625
2618
2843
Customer loans (gross)
804
855
819
899
930
Loan loss reserves
199
218
218
160
120
Customer loans (net)
Earning assets
Equity interests/participations (nonfinancial)
All other assets
605
637
601
739
811
3385
3783
3820
4328
4205
0
0
0
0
0
26
28
30
40
37
Total assets
3247
3631
3845
4259
4219
Adjusted assets
3246
3630
3844
4257
4218
Total deposits
1654
1865
1824
251
170
Other borrowings
1144
1312
1608
3587
3646
Liabilities (category name - no data)
Other liabilities
6
14
12
13
14
Total Liabilities
2865
3259
3482
3896
3867
Total equity
383
373
363
363
352
Common shareholders' equity (reported)
383
373
363
363
352
529
655
576
403
453
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
22
47
68
90
59
Credit loss provisions (net new)
7
34
62
81
44
Net income before extraordinaries
Extraordinary income
Central Government Agencies 2016 | September 2016
11
4
4
7
11
0
0
0
0
0
spglobal.com/ratings
141
Summary Analysis
Small Business Corp. (SBC)
Ratings:
AA/Stable/A-1+
Rationale
Last Ratings Action
And Date
Ratings raised on
Aug. 8, 2016
We equalize the ratings on SBC with our ratings
on the Korean sovereign, reflecting our opinion
that an almost certain likelihood exists that the
Korean government would provide timely and
sufficient extraordinary support to SBC in the
event of financial difficulties.
SBC has special statutory status to manage and
operate the Small And Midsize Enterprise StartUp And Promotion Fund (SME Fund), which is a
public fund of the Korean government. Therefore,
we do not assess the stand-alone credit profile of
SBC before considering potential extraordinary
government support for the company.
We base our assessment of an almost certain
likelihood of extraordinary government support
on our view of SBC's:
––Critical role as a government-controlled entity
in Korea that is responsible for nurturing small
and midsize enterprises (SMEs) through the
SME Fund; and
––Integral link with the government, reflecting the
government's capital contributions to the SME
Fund and its strict control over SBC's financial
accounts and strategy.
SBC's critical role to support financing of
SMEs has significant political and economic
importance. SBC operates on behalf of the
government, providing funding for start-ups
within the SME sector in Korea. This could not be
readily undertaken by the private sector, due to
the nature of SBC's operations.
SBC has an integral link with the government,
which provides legally explicit government
support for this government-related entity. SBC
is supervised by the Small and Medium Business
Administration (SMBA), which is a central
government agency for SMEs. Key management
142
Central Government Agencies 2016 | September 2016
personnel and the board of directors of SBC are
appointed either by Korea's President or the
SMBA. An operating committee consisting of
members from government departments and the
private sector authorizes SBC's budget.
The government provides strong ongoing support,
primarily in the form of capital contributions
to cover any losses from SBC's operations. We
expect the Korean government to continue to
cover any losses as legally obligated by the SME
Promotion Act. SBC's activities are structurally
unprofitable, reflecting their public policy role,
because SBC provides loans to SMEs below its
funding costs under its policy mandate to nurture
the SME sector.
SBC is a statutory entity established by the
SME Promotion Act primarily to manage and
operate the SME Fund, a public fund of the
Korean government. SBC is exempt from initial
capitalization requirements, does not have a
balance sheet, and relies on the SME Fund to
cover administrative expenses and to fulfill
financial obligations. The SME Promotion Act
also states that bonds issued by SBC for the SME
Fund fall under the obligations of the SME Fund.
Therefore, we view SBC and the SME Fund as
essentially a single unit.
SBC provides financial and technical assistance
primarily to start-up businesses, ventures,
and SMEs with good growth potential that face
difficulty obtaining commercial loans. SMEs play
a vital role in Korea's economy: More than 99%
of companies in Korea are SMEs and these SMEs
employ about 88% of the total workforce. The role
of SBC is strengthened by government support for
deficits not covered by fund reserves.
The government's policy toward SMEs underpins
SBC's strategy. SBC operates under the SMBA.
The government declares SBC a financial quasigovernmental institution with similar status to
SACP:
N/A
LOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
It operates to support
financing of SMEs
in Korea, which has
significant political
and economic
importance. On behalf
of the government, it
provides funding for
start-ups, small and
midsize enterprises.
This could not be
readily undertaken
by the private sector
due to the nature
of the unprofitable
operations being run.
Issuer Website:
www.sbc.or.kr
Primary Credit
Analyst:
Rebecca Hrvatin
Melbourne
(61) 3 9631 2244
rebecca.hrvatin@
spglobal.com
Secondary Credit
Analyst:
YeeFarn Phua
Singapore
(65) 6239-6341
yeefarn.phua@
spglobal.com
Ratings At End June
2015:
A+/Positive/A-1
Ratings At End June
2008:
A/Stable/A-1
spglobal.com/ratings
Summary Analysis
other Korean agencies fulfilling important
government policy roles, such as Korea Land
and Housing Corp.
In recent years, SBC has been adapting its
portfolio to a greater mix of direct rather than
indirect loans. Total loan assets in the SME
Fund as of December 2015 totaled Korean
won (KRW) 16 trillion, with 53.4% of loans
being directly to SME (up from 43.5% in 2014).
SBC faces interest rate risk because most
of its funding is at fixed rates and it lends at
floating rates. In addition, SBC's interest rates
on loans are generally lower than funding
rates, reflecting its policy role. Essentially,
SBC transfers subsidies to SME borrowers
at the expense of the government's annual
contributions to SBC.
SBC faces interest rate risk because most of its
funding is fixed rate and it lends at floating rates.
In addition, SBC's interest rates on loans are
mostly lower than its funding rates, reflecting its
policy role. Essentially, SBC transfers subsidies
to SME borrowers at the expense of the
government's annual contributions to SBC.
SBC implemented a strong prudential risk
management framework in 2015, including
establishing a department fully dedicated to
enterprise risk management.
Outlook
The stable outlook on the ratings on SBC is the
same as that on the ratings on the Republic of
Korea, reflecting our assessment of an almost
certain likelihood of extraordinary government
Small Business Corp.: Selected Indicators
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
KRW
KRW
KRW
KRW
KRW
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Leverage ratio (%)
10.4
8.8
7.7
7.6
8.6
Total adjusted capital/adjusted assets (%)
10.4
8.7
7.6
7.5
8.6
Net nonperforming assets/customer loans + other real estate owned (%)
N/A
N/A
N/A
N/A
N/A
Net interest income/operating revenues (%)
N/A
N/A
N/A
N/A
N/A
Core earnings/ Adjusted assets (%)
N/A
N/A
N/A
N/A
N/A
Core earnings/operating revenues (%)
N/A
N/A
N/A
N/A
N/A
Loan loss reserves/gross nonperforming assets (%)
N/A
N/A
N/A
N/A
N/A
Growth in customer loans (%)
-4.3
-1.2
1.6
-1.9
-3.8
Growth in loss reserves (%)
25.0
22.7
2.7
15.6
27.7
Growth in adjusted assets (%)
-2.5
-1.0
2.3
-2.1
-4.1
N.M.
N.M.
N.M.
N.M.
N.M.
N/A
N/A
N/A
N/A
N/A
YoY growth in loan loss provisions (%)
Stable funding ratio (%)
Short-term wholesale funding/total wholesale funding (%)
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
Central Government Agencies 2016 | September 2016
50.8
47.7
22.0
21.4
20.1
100.0
100.0
100.0
100.0
100.0
50.8
47.7
22.0
21.4
20.1
spglobal.com/ratings
143
Summary Analysis
support for SBC upon distress. Our ratings on SBC
would move in tandem with our ratings on the
Korean sovereign.
We believe the almost certain likelihood of
government support for SBC will persist over the
medium term. There may be downward pressure
on the rating if SBC's public policy role or its link
with the government were to diminish, depending
on the magnitude of such change.
Small Business Corp.: Summary Balance Sheet
Period
Currency
Denomination
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
KRW
KRW
KRW
KRW
KRW
Mil.
Mil.
Mil.
Mil.
Mil.
Assets (category name - no data)
Cash and money market instruments
234039
118042
235540
109245
148268
1789395
1543212
1375753
1337616
1307651
0
0
0
0
0
14225830
14857578
15038797
14802620
15082236
647150
517526
421634
410741
355308
Customer loans (net)
13578680
14340052
14617163
14391879
14726927
Earning assets
16015225
16400790
16414551
16140236
16389887
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Equity interests/participations (nonfinancial)
All other assets
0
0
0
0
0
150412
56557
52256
47950
49817
Total assets
15980576
16386173
16558284
16188835
16530801
Adjusted assets
15973410
16378689
16551066
16182100
16526080
0
0
0
0
0
14122933
14800752
15134509
14779893
14885399
Liabilities (category name - no data)
Total deposits
Other borrowings
Other liabilities
194303
145541
151624
184015
227074
Total Liabilities
14317236
14946293
15286133
14963908
15112472
Total equity
1663340
1439880
1272152
1224927
1418328
Common shareholders' equity (reported)
1663340
1439880
1272152
1224927
1418328
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
144
Central Government Agencies 2016 | September 2016
N/A
N/A
N/A
N/A
N/A
-62536
-11257
-63750
-286304
-307040
0
0
0
0
0
12178
23070
-31545
-270110
0
0
0
0
0
0
spglobal.com/ratings
Summary Analysis
Swedish Export Credit Corp.
(SEK)
Rationale
The ratings on SEK reflect our opinion that there
is an extremely high likelihood of extraordinary
support for the company from Sweden. We qualify
SEK as a government-related entity (GRE) under
our criteria for rating GREs, and we consider that
SEK:
––Plays a very important role for the Swedish
government in providing financing to the export
sector (which generates about 50% of GDP),
especially in times of scarce credit availability;
and
––Has an integral link with the Swedish
government, reflecting its 100% ownership
of SEK and supportive stance toward the
company, as well as SEK's mandate as the
country's sole provider of Commercial Interest
Reference Rate (CIRR) export loans to Swedish
exporters.
Therefore, we believe that the likelihood of
the Swedish government providing timely and
sufficient support to SEK, if needed, is extremely
high. Our long-term rating on SEK consequently
incorporates five notches of uplift above our
assessment of SEK's stand-alone credit profile.
In our view, SEK's business position is moderate,
reflecting the company's low-margin operating
environment from its low risk operations,
competition, and its relatively narrow role of
supporting Swedish export companies. SEK is
an important pillar for the success of Swedish
exporters and it offers corporate lending for
the benefit of Swedish export companies and
end-customer financing. In addition, SEK played
an especially important role during the difficult
market conditions in 2008-2009, when traditional
bank financing was scarce.
Central Government Agencies 2016 | September 2016
Ratings:
AA+/Stable/A-1+
Last Ratings Action
And Date
Ratings affirmed on
Oct. 30, 2015
SEK depends on a number of large Swedish
exporters for a significant part of its revenues.
According to SEK's segment reporting, it earns
about 70%-75% of its pretax lending profits
from corporate lending, despite 40% of total
interest-bearing assets in this segment. SEK's
lending is mainly conducted via low-margin loan
syndications or by working with commercial banks
within long-term export financing syndications
where SEK is generally more willing to take on
longer-term and more capital intensive tranches
than private commercial banks in order to create
financing solutions for the export sector.
SACP:
aLOS:
Extremely high
Role:
Very important
Link:
Integral
Key Policy Role:
To provide financing
to the export sector,
especially in times
of scarce credit
availability.
Issuer Website:
www.sek.se
We see SEK's management and strategy as
stable and view ownership by the Swedish state
as providing significant uplift for the rating. We
believe that management has executed a more
defined strategy and continues to develop its
own business relationships with a larger variety
of export-oriented clients. We note that SEK
has strengthened its corporate governance and
risk management substantially in recent years,
improving its ability to supervise and value its
complex operations and balance sheet.
Primary Credit
Analyst:
Sean Cotten
Stockholm
(46) 8-440-5928
sean.cotten@
spglobal.com
Secondary Credit
Analyst:
Alexander Ekbom
Stockholm
(46) 8-440-5911
alexander.ekbom@
spglobal.com
We estimate that the risk-adjusted capital ratio
for SEK will improve, owing to the company's
high-quality lending and associated guarantees
and its high-quality capital base. SEK's extensive
use of sovereign and bank guarantees reduces
its corporate exposure and risk weightings. We
expect SEK will continue to post annual aftertax earnings, with the return on equity at about
6% in the coming two years, supporting further
strengthening of the capital base.
Ratings At End June
2015:
AA+/Stable/A-1+
Ratings At End June
2008:
AA+/Stable/A-1+
Despite SEK's reduction in total net lending in
2015, we anticipate 3%-5% growth in lending in
the coming years, as SEK continues to increase
its end-customer financing book and competes
with commercial banks for corporate lending to
spglobal.com/ratings
145
Summary Analysis
Swedish exporters, where demand for investment
remains moderate.
Given SEK's narrow lending focus, its earnings
composition is dominated by interest income
earned on extended loans, loans in the form
of interest-bearing securities, and other debt
instruments held as liquidity. Revenues are almost
exclusively generated through loan syndications
and returns on bonds issued by large Swedish
exporters that SEK has invested in and are
considered to be part of lending activity to support
the sector.
We consider SEK's risk position moderate,
due to concentration risk arising from largely
unguaranteed corporate exposures, bond
investments that we consider to constitute lending,
and its complex operational structure. However,
the company's loss history is exceptional, and we
expect that its asset quality will remain strong.
Most losses have been due to bank failures and
investments in collateralized debt obligations in its
liquidity portfolio.
We consider SEK's funding to be average,
based on its link with the Swedish government
and the back-up facilities at the company's
disposal. We consider SEK's funding structures
relatively complex, but we see the link to the
Swedish government and the diversity of SEK's
funding sources as supportive factors, which
have worked effectively in difficult markets
historically, largely due to the strength of the
sovereign. With regards to the funding profile, we
consider SEK's importance to the government
and the government-provided credit facility in our
assessment of SEK's liquidity as adequate.
Swedish Export Credit Corp.: Selected Indicators
Period
Currency
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
SEK
SEK
SEK
SEK
Denomination
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
21.6
16.9
19.5
23.0
Leverage ratio (%)
5.9
4.8
5.0
4.9
Total adjusted capital/adjusted assets (%)
5.7
4.6
4.8
4.5
Net nonperforming assets/customer loans + other real estate owned (%)
Net interest income/operating revenues (%)
Core earnings/ Adjusted assets (%)
0.1
-0.2
-0.4
-0.4
80.8
75.9
79.4
137.0
0.4
0.4
0.4
0.2
Core earnings/operating revenues (%)
57.7
60.6
55.7
49.9
Loan loss reserves/gross nonperforming assets (%)
65.9
4218.2
N.M.
N.M.
Growth in customer loans (%)
-6.8
8.3
7.6
-0.4
Growth in loss reserves (%)
-49.1
-39.7
6.8
6.6
Growth in adjusted assets (%)
-13.8
6.1
-2.1
-2.1
YoY growth in loan loss provisions (%)
N.M.
-288.6
65.4
-78.9
Stable funding ratio (%)
76.5
80.9
86.1
82.9
Short-term wholesale funding/total wholesale funding (%)
36.0
37.1
35.0
39.2
100.0
100.0
100.0
100.0
36.0
37.1
35.0
39.2
Total wholesale funding / funding base (%)
Short-term wholesale funding/funding base (%)
146
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Summary Analysis
Outlook
The stable outlook on SEK reflects our view that
ongoing regulatory initiatives for credit institutions
in the EU are unlikely to significantly hinder the
Swedish government from providing timely support
to SEK. The outlook also reflects our expectation
that the company's asset quality will remain strong
and its capitalization robust.
We could consider a negative rating action if we
saw that SEK's link with the Swedish government
was weakening.
Conversely, we could raise the ratings if the
Swedish government provided a timely guarantee
for SEK's liabilities, although we regard this as
unlikely.
Swedish Export Credit Corp.: Summary Balance Sheet
Period
Year to Dec. 2015
2014
2013
2012
Annual
Annual
Annual
Annual
Currency
SEK
SEK
SEK
SEK
Denomination
Mil.
Mil.
Mil.
Mil.
2258
7099
8337
2338
42837
69856
68746
82805
Assets (category name - no data)
Cash and money market instruments
Securities
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
29776
25510
24819
22084
189149
202844
187280
174089
236
464
770
721
Customer loans (net)
188913
202380
186511
173368
Earning assets
261762
298210
280845
278977
0
0
0
0
Equity interests/participations (nonfinancial)
All other assets
1854
2053
1039
4025
Total assets
280411
325166
306554
313136
Adjusted assets
280303
325031
306435
313021
5344
8353
8315
14547
Liabilities (category name - no data)
Total deposits
230300
275784
262507
261103
Other liabilities
Other borrowings
27939
24872
20741
23073
Total Liabilities
263583
309009
291564
298723
Total equity
16828
16157
14990
14412
Common shareholders' equity (reported)
16828
16157
14990
14412
358
11
0
0
1499
1556
1447
828
-36
-73
39
23
1187
1260
1090
709
0
0
0
0
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
147
Summary Analysis
Vnesheconombank (VEB)
Ratings:
BB+/Negative/B
Rationale
Last Ratings Action
And Date
Ratings affirmed on
Jul. 29, 2016
We base our ratings on Russian development
bank VEB on our opinion of the bank's status
as a government-related entity (GRE) with an
almost certain likelihood of receiving timely
and sufficient extraordinary support from the
Russian government in the event of financial
difficulties. Accordingly, we equalize our ratings
on VEB with those on Russia.
––In accordance with our criteria for GREs, our
view that there is an almost certain likelihood of
extraordinary government support is based on
our assessment of VEB's:
––Critical role for Russia as the government's
prime public development institution, a role that
cannot be readily undertaken by a private entity;
the VEB group's assets currently represent
about 5.5% of Russia's GDP; and
––Integral link with Russia. This is because of
VEB's unique status as a state corporation
operating under the law "On The Bank For
Development," with strong oversight from the
federal government and the prime minister on
the supervisory board. This special legal status
has been accredited to only four other entities
in Russia. By law, the supervisory board must
review transactions that exceed 10% of VEB's
capital and approve the bank's annual budget
and reports. We assume that tight state control
of VEB's activities will remain unchanged
over the medium term. However, if VEB lost its
status as a state company, we would view this
as a weakening of the company's link with the
government.
The government has a proven track record of
timely supporting VEB in all circumstances,
including through a recent US$6 billion
subordinated deposit to VEB. Furthermore,
high-ranking government and central bank
officials have reiterated the government's strong
148
Central Government Agencies 2016 | September 2016
commitment to VEB after the imposition of U.S.
sanctions.
We base our assessment of VEB's stand-alone
credit profile (SACP) at 'b-' on our 'bb-' anchor
for financial institutions operating primarily in
Russia, as well as VEB's:
––Strong business position, reflecting its unique
status as a primary state development institution
in Russia, and its pivotal and sustainable position
as a prime source of long-term bank funding for
complex investment projects in infrastructure,
machinery, and other strategic sectors defined by
Russia's government. Our view on VEB's business
position also reflects operations in sectors such
as pure commercial retail banking and leasing.
––Weak capital and earnings, reflecting our
expectations that the bank's projected
risk-adjusted capital (RAC) ratio, before
diversification, will stay at about between 3%
and 4% over the next three years. We do not
include the long-term subordinated deposit
provided by the National Welfare Fund into our
calculation of the RAC ratio, in accordance with
our criteria. This subordinated deposit is included
in the regulatory capital ratio VEB calculates
to measure its solvency. Meeting this ratio is of
utmost importance, as failure to do so could lead
to immediate repayment of certain obligations,
and therefore liquidity outflows. Consequently,
this subordinated deposit stabilizes the
institution's financial profile.
SACP:
bLOS:
Almost certain
Role:
Critical
Link:
Integral
Key Policy Role:
It operates as
the Russian
government's prime
public development
institution, a role that
cannot be readily
undertaken by a
private entity
Issuer Website:
www.veb.ru
Primary Credit
Analyst:
Karen Vartapetov
Moscow
(7) 495-783-40-18
karen.vartapetov@
spglobal.com
Secondary Credit
Analyst:
Victor Nikolskiy
Moscow
(7) 495-783-40-10
victor.nikolskiy@
spoglobal.com
Ratings At End June
2015:
BB+/Negative/B
Ratings At End June
2008:
BBB+/Stable/A-2
––Weak risk position, reflecting the policy role that
VEB plays and its involvement in governmentdriven projects, including loss-making ones.
––VEB's funding is average and its liquidity
is moderate, in our opinion. Our moderate
assessment of liquidity reflects the negative
effect of U.S. Treasury sanctions on VEB's
future capital market access, which increases
spglobal.com/ratings
Summary Analysis
possible refinancing risks. At the same time,
our assessment of VEB's liquidity, including
short-term government support, notably
that of the central bank, is adequate, as we
consider that the government or the central
bank would intervene to offset any temporary
liquidity shortage while sanctions are in place.
As of March 31, 2015, about 25% of the bank's
liabilities stem from the National Welfare
Fund, Russian government, and central
bank. We estimate VEB's foreign currencydenominated debt due in 2016 as modest, with
some increase expected in 2017. As of Dec.
31, 2015, about 24% of the bank's liabilities
stem from the National Welfare Fund, Russian
government, and central bank. We estimate
VEB's foreign currency denominated debt due
in 2016-2018 as modest, with some increase
expected in 2020. We believe that VEB will rely
on the government to refinance this debt.
Outlook
The negative outlook on VEB reflects that on
Russia, as well as the possibility that we could
reassess the likelihood of government support
for VEB. We might lower the ratings over the
next two years if we saw evidence that VEB's
SACP had weakened to a level at which the bank
would be vulnerable to nonpayment and depend
on favorable business, financial, and economic
conditions to be able to meet all its financial
commitments.
Evidence of a weaker link with or role for the
government could also result in a negative rating
action on VEB. We would also lower the ratings
if we took a negative action on Russia. We might
revise the outlook on VEB to stable if we revised
the outlook on Russia to stable, and pressure on
VEB's assets and liquidity eased or VEB received
ongoing support that fully offsets this pressure.
Vnesheconombank: Selected Indicators
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
RUB
RUB
RUB
RUB
RUB
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Tier 1 capital ratio (%)
N/A
N/A
N/A
N/A
N/A
Period
Leverage ratio (%)
9.9
9.9
17.6
16.7
18.7
Total adjusted capital/adjusted assets (%)
9.9
9.9
17.5
16.6
18.5
Net nonperforming assets/customer loans + other real estate owned (%)
-1.5
0.2
-1.5
-2.9
-6.8
Net interest income/operating revenues (%)
85.1
59.4
50.4
67.8
75.4
Core earnings/ Adjusted assets (%)
-7.2
-5.9
0.3
0.7
0.3
-399.4
-136.0
5.2
16.1
9.4
106.0
99.0
110.5
129.0
201.4
Core earnings/operating revenues (%)
Loan loss reserves/gross nonperforming assets (%)
Growth in customer loans (%)
15.1
48.7
27.0
22.1
47.9
Growth in loss reserves (%)
30.8
101.1
50.7
18.4
13.2
Growth in adjusted assets (%)
12.8
17.3
13.5
15.3
23.9
YoY growth in loan loss provisions (%)
-3.7
156.5
160.3
24.7
-14.8
Stable funding ratio (%)
78.8
89.5
80.3
86.5
66.2
Short-term wholesale funding/total wholesale funding (%)
41.3
29.2
44.5
37.3
14.7
Total wholesale funding / funding base (%)
82.4
84.9
84.9
85.3
82.2
Short-term wholesale funding/funding base (%)
34.0
24.8
37.8
31.8
12.1
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
149
Summary Analysis
Vnesheconombank: Summary Balance Sheet
Year to Dec. 2015
2014
2013
2012
2011
Annual
Annual
Annual
Annual
Annual
Currency
RUB
RUB
RUB
RUB
RUB
Denomination
Mil.
Mil.
Mil.
Mil.
Mil.
Cash and money market instruments
527790
552886
427052
408584
309418
Securities
475897
432179
521726
568209
538037
47235
46405
307854
304840
349543
3643601
3166622
2129893
1676884
1373017
766676
586233
291489
193436
163309
Customer loans (net)
2876925
2580389
1838404
1483448
1209708
Earning assets
4648743
4179242
3326980
2853151
2532798
Period
Assets (category name - no data)
Loans to banks (net)
Customer loans (gross)
Loan loss reserves
Equity interests/participations (nonfinancial)
9960
10892
10473
9510
5894
318696
134506
112672
63799
46362
Total assets
4382427
3885820
3313958
2919100
2531947
Adjusted assets
4378052
3881641
3309970
2915405
2527817
Total deposits
2368125
2078546
2070793
1887637
1700808
Other borrowings
1282023
1286160
603319
388939
267484
All other assets
Liabilities (category name - no data)
Other liabilities
251422
142549
62987
110641
22267
Total Liabilities
3901570
3507255
2737099
2387217
1999272
Total equity
480857
378565
576859
531883
532675
Common shareholders' equity (reported)
476324
374254
571450
531177
531856
723224
592320
263841
149940
81106
5242
104196
144896
74298
51267
314131
326063
127120
48837
39156
16489
-249024
8571
17509
7474
0
0
0
0
0
Equity (category name - no data)
Other items
Nonperforming assets
Preprovision operating income
Credit loss provisions (net new)
Net income before extraordinaries
Extraordinary income
150
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
335298
2011
Central Government Agencies 2016 | September 2016
40133
2011
87.1
105.6
104.8
107.4
108.9
2013
2012
2011
89.6
102.3
101.5
98.9
98.6
2014
2013
2012
2011
0.0
0.0
0.0
0.0
2013
2012
spglobal.com/ratings
2011
0.1
0.1
0.1
0.0
0.0
0.0
0.0
0.2
0.0
2014
14.4
22.6
12.7
13.9
14.8
16.5
100.0
100.0
100.0
100.0
100.0
91.8
93.6
93.2
93.0
90.8
29705
26946
25456
22869
25620
188049
172473
158011
136191
141303
DBJ
Liquid assets as a percentage of total adjusted assets (%)
2015
0.0
0.2
3.4
2011
25.2
23.2
5.3
2013
5.7
4.9
2014
2012
22.5
26.5
Short-term wholesale funding/funding base (%)
2015
2.7
92.7
92.4
92.2
84.7
Total wholesale funding / funding base (%)
2015
101.9
87.1
87.9
97.6
109.3
2014
105.6
70563
79891
92703
109619
164808.0123
992413
1206688
1352346
1662641
1944379
CDB
Stable funding ratio (%
2015
Funding and Liquidity
31880
32301
2013
2012
17069
348660
2012
24888
331080
2013
2014
329410
Total Equity
2015
234946
2014
BNDES
Total assets (reported)
2015
Principal size indicators (Mil. US$)
Millions USD
0.0
0.0
0.0
0.0
0.0
13.4
14.2
13.1
11.9
9.8
100.0
100.0
100.0
100.0
100.0
95.7
95.1
95.7
96.2
95.8
104916
93534
87164
76052
82319
134564
118135
108054
94370
102850
JICA
National Development Banks
0.0
0.0
0.0
0.0
0.0
27.0
22.8
23.5
25.1
29.0
95.3
96.8
97.3
97.7
97.9
238.6
255.0
236.1
236.5
212.4
23129
24065
28193
26130
27360
641235
672124
638755
591699
546083
KfW
0.0
0.0
0.0
0.0
0.0
40.8
31.3
32.1
38.0
41.4
75.5
65.0
68.2
80.4
79.2
73.1
74.8
78.0
76.6
57.7
17760
19622
17837
27672
28844
128644
155510
159521
254034
263006
KDB
0.2
0.2
0.2
0.2
0.2
42.8
42.8
43.8
46.6
41.2
95.0
95.4
96.6
96.7
96.7
N/A
N/A
67.2
67.4
80.3
2561
3221
3937
4556
47684
190348
250166
311337
381602
436591
EIC
0.1
0.1
0.1
0.1
N/A
11.7
12.2
12.2
13.7
N/A
100.0
100.0
100.0
100.0
N/A
84.5
80.3
78.0
74.3
N/A
27698
24910
22682
20482
N/A
153207
153171
158354
153699
N/A
JBIC
Export-Import Banks
Five-Year Comparative Data for Selected Central Government Agencies
0.0
0.0
0.0
0.0
0.0
43.3
48.2
50.3
43.6
43.2
100.0
100.0
100.0
100.0
100.0
59.8
55.7
54.6
63.1
63.2
11838
13953
14911
15647
14193
285774
294345
254237
213845
182198
CMHC
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-129055
-126688
-132559
-132220
N/A
3222422
3270108
3248176
3221917
FAM
FRM
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-77618
-73610
-83794
-83505
N/A
1989856
1966061
1945539
1986050
Housing Agencies
0.0
0.0
0.0
0.0
0.0
29.3
24.4
28.7
33.7
29.2
47.8
52.1
51.4
54.7
49.8
104.9
108.8
126.0
122.5
121.5
44898
51130
42735
40482
38151
339867
378198
196660
180959
169201
CDC
0.5
0.5
0.5
0.5
0.5
9.3
10.8
6.9
2.5
3.4
13.2
17.1
13.8
14.4
16.8
173.8
172.0
180.4
188.2
186.4
23778
27782
32299
42535
36460
372109
433484
467935
485969
432002
CDP
0.1
0.1
0.1
0.2
0.2
62.3
42.2
49.7
48.4
45.9
93.2
83.5
84.4
89.4
90.9
N/A
N/A
120.0
147.0
164.3
0
46
163
523
790
442894
325126
257924
222162
185773
FMS
Other Agencies
0.0
0.0
0.1
0.0
0.0
47.2
41.9
43.7
45.9
45.1
62.1
59.3
60.4
59.6
59.5
58.4
63.6
62.5
58.7
58.1
10879
12512
12962
13602
14016
160546
185779
202184
201338
203818
IBK
Comparative data
151
152
5.4
5.8
7.3
2013
2012
2011
Central Government Agencies 2016 | September 2016
1.0
1.0
1.1
1.5
2013
2012
2011
90.2
94.1
-0.7
-0.7
2012
2011
4782.6
1385.7
625.6
2013
2012
2011
523.4
422.1
704.0
75.7
86.0
82.3
74.6
82.8
3651.0
2014
454.4
Loan loss reserves/gross nonperforming assets (%)
2015
2879.3
421.2
0.4
0.2
0.2
-1.7
-2.5
-2.5
14.3
15.4
16.2
17.3
18.8
7.2
7.1
6.8
-0.6
2013
0.1
6.3
-2.8
5.8
0.9
0.8
1.1
1.0
0.9
99.9
89.8
-0.5
0.5
0.3
0.6
0.5
0.5
92.6
95.4
86.1
95.2
78.0
79.5
80.9
81.0
80.6
JICA
2014
0.7
0.8
1.0
1.0
0.8
101.0
83.5
90.3
85.3
15.3
15.1
15.6
16.1
17.5
DBJ
Net nonperforming assets/customer loans + other real estate owned (%)
2015
-0.7
-2.9
0.2
Credit Quality
0.7
2014
81.5
49.3
2012
2011
Core earnings/ Adjusted assets (%)
2015
78.8
2013
96.4
63.6
80.2
78.9
2014
6.8
6.5
6.8
6.4
8.3
CDB
Net interest income/operating revenues (%)
2015
129.9
Profitability
4.7
4.8
2014
BNDES
Leverage ratio (%)
2015
Leverage
Millions USD
National Development Banks
81.8
53.8
63.0
68.2
89.7
1.0
1.5
1.0
0.8
0.1
0.4
0.5
0.3
0.3
0.4
88.8
81.5
82.4
84.5
73.8
4.1
4.1
4.8
5.0
5.6
KfW
73.0
59.3
61.3
89.1
62.1
0.5
0.7
1.2
0.2
2.0
0.9
0.6
-1.0
0.5
0.7
61.2
63.1
194.1
47.6
30.0
11.5
10.7
9.5
9.1
9.3
KDB
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0.2
0.2
0.2
0.1
0.1
98.0
65.9
68.5
64.5
24.4
1.3
1.3
1.3
1.2
10.9
EIC
33.7
34.0
33.3
27.4
N/A
3.1
2.6
2.1
2.1
N/A
0.6
0.5
0.7
0.8
N/A
89.3
53.4
70.5
62.1
N/A
22.2
18.8
16.4
15.0
N/A
JBIC
Export-Import Banks
Five-Year Comparative Data for Selected Central Government Agencies
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0.5
0.6
0.7
1.1
0.6
16.5
2.4
3.0
1.7
2.2
3.8
4.4
5.5
7.0
7.5
CMHC
N/A
22.2
18.5
16.0
14.1
N/A
6.9
6.4
6.1
5.6
N/A
N/A
N/A
N/A
N/A
N/A
108.6
67.1
90.7
95.9
N/A
N/A
N/A
N/A
N/A
FAM
Housing Agencies
N/A
6.1
6.0
5.7
5.2
N/A
N/A
N/A
N/A
4.8
N/A
N/A
N/A
N/A
N/A
N/A
110.0
74.2
64.0
106.3
N/A
N/A
N/A
N/A
N/A
FRM
53.1
53.3
54.2
52.2
56.3
3.8
3.9
3.3
2.8
3.7
0.4
-0.4
0.7
1.3
0.8
52.9
75.3
12.4
9.4
9.3
12.0
11.5
16.8
17.1
16.6
CDC
62.6
53.1
33.5
63.0
70.7
0.1
0.1
0.2
0.1
0.1
0.8
1.0
0.9
0.7
N/A
55.2
63.4
31.5
8.4
7.0
5.9
5.8
5.9
6.4
6.0
CDP
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-2.9
0.0
0.1
0.2
0.2
86.1
88.4
80.6
86.8
83.8
0.0
0.0
0.1
0.2
0.4
FMS
Other Agencies
120.7
108.7
106.6
102.8
109.1
-0.3
-0.1
-0.1
0.0
-0.1
0.8
0.6
0.4
0.5
0.5
92.0
96.2
95.5
98.1
96.5
6.0
6.1
5.8
6.0
5.9
IBK
Comparative data
spglobal.com/ratings
Central Government Agencies 2016 | September 2016
15.5
17.3
6.1
2012
2011
Growth in adjusted assets (%)
2015
13.8
2011
22.3
20.3
8.9
26.0
22.3
22.5
16.1
11.4
11.1
15.9
CDB
5.1
4.2
0.7
-0.1
-2.9
4.7
2.0
-0.6
-4.2
-2.3
DBJ
-0.4
-0.2
0.2
1.6
2.1
-0.2
-0.1
0.4
1.4
2.5
JICA
12.0
3.0
-8.8
5.2
2.8
9.4
-3.1
-1.1
3.7
12.6
KfW
7.6
11.2
1.4
64.5
11.6
13.7
12.2
6.6
46.3
0.5
KDB
35.2
30.0
20.9
25.6
19.7
29.2
29.4
22.7
20.0
17.8
EIC
-0.2
16.6
15.7
14.1
N/A
-3.2
30.1
19.9
14.1
N/A
JBIC
Export-Import Banks
1.4
0.1
-7.5
-8.0
1.5
0.7
-0.6
-8.3
-9.8
1.5
CMHC
N/A
0.3
1.5
-0.7
-0.8
N/A
1.3
1.9
-0.4
-0.3
FAM
Housing Agencies
N/A
-7.3
-1.2
-1.0
2.1
N/A
-5.7
-0.4
0.8
2.7
FRM
-2.8
9.8
-46.3
4.5
4.2
-67.9
3.9
20.2
20.1
-18.4
CDC
10.1
12.5
3.7
17.7
-1.1
6.5
8.1
-1.2
-1.3
2.3
CDP
2.5
-27.9
-23.9
-2.2
-6.8
-16.0
-16.5
16.1
-21.0
-23.5
FMS
Other Agencies
9.0
6.3
7.5
3.3
9.2
8.6
3.2
4.9
7.7
9.5
IBK
BNDES:Banco Nacional de Desenvolvimento Economico e Social;CDC:Caisse des Depots et Consignations;; CMHC: Canada Mortgage and Housing Corp.; CDP: Cassa Depositi e Prestiti SpA; CDB:China Development
Bank Corp.; DBJ:Development Bank of Japan Inc.; EIC:Export-Import Bank of China (The); FAM:Fannie Mae; FMS:FMS Wertmanagement Anstalt des oeffentlichen Rechts; FRM:Freddie Mac; IBK:Industrial Bank of Korea;
JBIC:Japan Bank for International Cooperation; JICA:Japan International Cooperation Agency; KfW:KfW; KDB:Korea Development Bank.
N/A--Not available. Financial year end please refer to entity indicators table. 9.3
14.5
2013
2012
12.2
14.7
2013
2014
15.1
7.0
BNDES
2014
Growth in customer loans (%)
2015
Balance sheet trends
Millions USD
National Development Banks
Five-Year Comparative Data for Selected Central Government Agencies
Comparative data
spglobal.com/ratings
153
Comparative data
Sovereign Ratings And Country T&C Assessments As Of August 31, 2016
Country
Sovereign foreign-currency
ratings (LT/outlook/ST)
Sovereign local-currency
ratings (LT/outlook/ST)
T&C assessment
Abu Dhabi
AA/Stable/A-1+
AA/Stable/A-1+
AA+*
Albania
B+/Stable/B
B+/Stable/B
BB
Andorra
BBB-/Stable/A-3
BBB-/Stable/A-3
AAA*
Angola
B/Negative/B
B/Negative/B
B
Argentina
B-/Stable/B
B-/Stable/B
B-
Aruba
BBB+/Positive/A-2
BBB+/Positive/A-2
BBB+
Australia
AAA/Negative/A-1+
AAA/Negative/A-1+
AAA
Austria
AA+/Stable/A-1+
AA+/Stable/A-1+
AAA*
Azerbaijan
BB+/Negative/B
BB+/Negative/B
BB+
Bahamas (The Commonwealth of the)
BBB-/Negative/A-3
BBB-/Negative/A-3
BBB
Bahrain
BB/Stable/B
BB/Stable/B
BB+
Bangladesh
BB-/Stable/B
BB-/Stable/B
BB-
Barbados
B/Negative/B
B/Negative/B
B
Belarus
B-/Stable/B
B-/Stable/B
B-
Belgium
AA/Stable/A-1+
AA/Stable/A-1+
AAA*
Belize
B-/Stable/B
B-/Stable/B
B-
Bermuda
A+/Stable/A-1
A+/Stable/A-1
AA+
Bolivia
BB/Stable/B
BB/Stable/B
BB
Bosnia and Herzegovina
B/Stable/B
B/Stable/B
BB-
Botswana
A-/Negative/A-2
A-/Negative/A-2
A+
Brazil
BB/Negative/B
BB/Negative/B
BBB-
Bulgaria
BB+/Stable/B
BB+/Stable/B
BBB+
Burkina Faso
B-/Positive/B
B-/Positive/B
BBB-*
Cameroon
B/Stable/B
B/Stable/B
BBB-*
Canada
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA
Cape Verde
B/Negative/B
B/Negative/B
BB-
Chile
AA-/Stable/A-1+
AA/Stable/A-1+
AA+
China
AA-/Negative/A-1+
AA-/Negative/A-1+
AA-
Colombia
BBB/Negative/A-2
BBB+/Negative/A-2
A-
Congo (Democratic Republic of)
B-/Negative/B
B-/Negative/B
B-
Congo (Republic of)
B-/Stable/B
B-/Stable/B
BBB-*
Cook Islands
B+/Stable/B
B+/Stable/B
AAA*
Costa Rica
BB-/Negative/B
BB-/Negative/B
BB+
Croatia
BB/Negative/B
BB/Negative/B
BBB
Curacao
A-/Stable/A-2
A-/Stable/A-2
A-
Cyprus
BB-/Positive/B
BB-/Positive/B
AAA*
154
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Comparative data
Country
Sovereign foreign-currency
ratings (LT/outlook/ST)
Sovereign local-currency
ratings (LT/outlook/ST)
T&C assessment
Czech Republic
AA-/Stable/A-1+
AA/Stable/A-1+
AA+
Denmark
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA
Dominican Republic
BB-/Stable/B
BB-/Stable/B
BB+
Ecuador
B/Stable/B
B/Stable/B
B
Egypt
B-/Negative/B
B-/Negative/B
B-
El Salvador
B+/Stable/B
B+/Stable/B
AAA*
Estonia
AA-/Stable/A-1+
AA-/Stable/A-1+
AAA*
Ethiopia
B/Stable/B
B/Stable/B
B
Fiji
B+/Stable/B
B+/Stable/B
B+
Finland
AA+/Negative/A-1+
AA+/Negative/A-1+
AAA*
France
AA/Negative/A-1+
AA/Negative/A-1+
AAA*
Georgia
BB-/Stable/B
BB-/Stable/B
BB+
Germany
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA*
Ghana
B-/Stable/B
B-/Stable/B
B
Greece
B-/Stable/B
B-/Stable/B
AAA*
Guatemala
BB/Stable/B
BB+/Stable/B
BBB-
Guernsey
AA-/Stable/A-1+
AA-/Stable/A-1+
AAA*
Honduras
B+/Positive/B
B+/Positive/B
BB-
Hong Kong
AAA/Negative/A-1+
AAA/Negative/A-1+
AAA
Hungary
BB+/Stable/B
BB+/Stable/B
BBB
Iceland
BBB+/Stable/A-2
BBB+/Stable/A-2
BBB+
India
BBB-/Stable/A-3
BBB-/Stable/A-3
BBB+
Indonesia
BB+/Positive/B
BB+/Positive/B
BBB-
Iraq
B-/Stable/B
B-/Stable/B
B-
Ireland
A+/Stable/A-1
A+/Stable/A-1
AAA*
Israel
A+/Stable/A-1
A+/Stable/A-1
AA
Italy
BBB-/Stable/A-3
BBB-/Stable/A-3
AAA*
Jamaica
B/Stable/B
B/Stable/B
B+
Japan
A+/Stable/A-1
A+/Stable/A-1
AA+
Jersey
AA-/Stable/A-1+
AA-/Stable/A-1+
AAA*
Jordan
BB-/Negative/B
BB-/Negative/B
BB+
Kazakhstan
BBB-/Negative/A-3
BBB-/Negative/A-3
BBB-
Kenya
B+/Negative/B
B+/Negative/B
BB-
Korea
AA/Stable/A-1+
AA/Stable/A-1+
AAA
Kyrgyz Republic
B/Stable/B
B/Stable/B
B
Kuwait
AA/Stable/A-1+
AA/Stable/A-1+
AA+
Latvia
A-/Stable/A-2
A-/Stable/A-2
AAA*
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
155
Comparative data
Country
Sovereign foreign-currency
ratings (LT/outlook/ST)
Sovereign local-currency
ratings (LT/outlook/ST)
T&C assessment
Lebanon
B-/Negative/B
B-/Negative/B
B+
Liechtenstein
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA*
Lithuania
A-/Stable/A-2
A-/Stable/A-2
AAA*
Luxembourg
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA*
Macedonia
BB-/Stable/B
BB-/Stable/B
BB
Malaysia
A-/Stable/A-2
A/Stable/A-1
A+
Malta
BBB+/Positive/A-2
BBB+/Positive/A-2
AAA*
Mexico
BBB+/Negative/A-2
A/Negative/A-1
A+
Mongolia
B-/Stable/B
B-/Stable/B
B
Montenegro
B+/Negative/B
B+/Negative/B
AAA*
Montserrat
BBB-/Stable/A-3
BBB-/Stable/A-3
BBB-*
Morocco
BBB-/Stable/A-3
BBB-/Stable/A-3
BBB+
Mozambique
CCC/Negative/C
B-/Negative/B
CCC
Netherlands
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA*
New Zealand
AA/Stable/A-1+
AA+/Stable/A-1+
AAA
Nicaragua
B+/Stable/B
B+/Stable/B
BB-
Nigeria
B+/Negative/B
B+/Negative/B
B+
Norway
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA
Oman
BBB-/Stable/A-3
BBB-/Stable/A-3
BBB
Pakistan
B-/Positive/B
B-/Positive/B
B-
Panama
BBB/Stable/A-2
BBB/Stable/A-2
AAA*
Papua New Guinea
B+/Negative/B
B+/Negative/B
BB
Paraguay
BB/Stable/B
BB/Stable/B
BB+
Peru
BBB+/Stable/A-2
A-/Stable/A-2
A
Philippines
BBB/Stable/A-2
BBB/Stable/A-2
BBB+
Poland
BBB+/Negative/A-2
A-/Negative/A-2
A
Portugal
BB+/Stable/B
BB+/Stable/B
AAA*
Qatar
AA/Stable/A-1+
AA/Stable/A-1+
AA+
Ras Al Khaimah
A/Stable/A-1
A/Stable/A-1
AA+*
Romania
BBB-/Stable/A-3
BBB-/Stable/A-3
A-
Russia
BB+/Negative/B
BBB-/Negative/A-3
BB+
Rwanda
B+/Negative/B
B+/Negative/B
B+
Saudi Arabia
A-/Stable/A-2
A-/Stable/A-2
A
Senegal
B+/Stable/B
B+/Stable/B
BBB-*
Serbia
BB-/Stable/B
BB-/Stable/B
BB
Sharjah
A/Negative/A-1
A/Negative/A-1
AA+*
Singapore
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA
156
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
Comparative data
Country
Sovereign foreign-currency
ratings (LT/outlook/ST)
Sovereign local-currency
ratings (LT/outlook/ST)
T&C assessment
Slovak Republic
A+/Stable/A-1
A+/Stable/A-1
AAA*
Slovenia
A/Stable/A-1
A/Stable/A-1
AAA*
South Africa
BBB-/Negative/A-3
BBB+/Negative/A-2
BBB+
Spain
BBB+/Stable/A-2
BBB+/Stable/A-2
AAA*
Sri Lanka
B+/Negative/B
B+/Negative/B
B+
Suriname
B+/Negative/B
B+/Negative/B
BB-
Sweden
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA
Switzerland
AAA/Stable/A-1+
AAA/Stable/A-1+
AAA
Taiwan
AA-/Stable/A-1+
AA-/Stable/A-1+
AA+
Thailand
BBB+/Stable/A-2
A-/Stable/A-2
A
Trinidad and Tobago
A-/Negative/A-2
A-/Negative/A-2
AA-
Turkey
BB/Negative/B
BB+/Negative/B
BBB-
Turks and Caicos
BBB+/Stable/A-2
BBB+/Stable/A-2
AAA
Uganda
B/Stable/B
B/Stable/B
B
Ukraine
B-/Stable/B
B-/Stable/B
B-
United Kingdom
AA/Negative/A-1+
AA/Negative/A-1+
AAA
United States
AA+/Stable/A-1+
AA+/Stable/A-1+
AAA
Uruguay
BBB/Negative/A-2
BBB/Negative/A-2
A-
Venezuela
CCC/Negative/C
CCC/Negative/C
CCC
Vietnam
BB-/Stable/B
BB-/Stable/B
BB-
Zambia
B/Negative/B
B/Negative/B
B
*These T&C assessments are for countries that are either members of monetary or currency unions or use as their local currency the currency of another sovereign.
Because of this, the assessment shown is based on S&P Global Ratings’ analysis of either the monetary authority of the monetary/currency union or the sovereign issuing
the currency. Thus, for European Economic and Monetary Union (EMU) members (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia,
Luxembourg, Malta, Netherlands, Portugal, Slovak Republic, Slovenia, and Spain), the T&C assessments reflect our view of the likelihood of the European Central Bank
restricting nonsovereign access to foreign exchange needed for debt service. Similarly, the T&C assessments for countries with rated sovereigns in the Eastern Caribbean
Currency Union (Grenada and Montserrat) reflect the current and projected policies of the Eastern Caribbean Central Bank. Likewise, the T&C assessments for countries with
rated sovereigns in the West African Economic and Monetary Union (Burkina Faso and Senegal) are based on the policies of the Central Bank of West African States, and the
T&C assessments for countries with rated sovereigns in the Central African Economic and Monetary Community (Cameroon and Congo-Brazzaville) are based on the policies
of the Bank of Central African States. As for countries that use the currency of another, the T&C assessments of El Salvador and Panama are equalized with that of the U.S.,
while those of Abu Dhabi and Ras Al Khaimah are equalized with that of the United Arab Emirates, Andorra and Montenegro with EMU members, the Cook Islands with New
Zealand, and Liechtenstein with Switzerland. LT – Long-term rating. ST – Short-term rating.
Central Government Agencies 2016 | September 2016
spglobal.com/ratings
157
Notes
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