Fitch Ratings has affirmed
The Outlook is Stable. We have also affirmed its Short-Term IDR at 'F1+' and Shareholder Support Rating (SSR) at 'a'.
ABCI, domiciled in
We have also affirmed the ratings on
Key Rating Drivers
Shareholder Support: ABCI's Long-Term IDR is driven by Fitch's belief that extraordinary support from
The Stable Outlook is in line with that of its parent and reflects our expectation that ABCI's role as a core subsidiary and the probability that it would receive extraordinary support from
Highly Integrated with Parent: ABCI's management and strategy, operations and business development are highly integrated with that of its parent. ABCI is a wholly owned subsidiary of
Strong Funding Support: We expect strong support from the parent, evident from the parent's provision of capital and liquidity support in the form of credit lines through its
Slow Capital-Market Recovery in
Modest Standalone Credit Profile: Fitch considers ABCI's standalone credit profile to be sub-investment grade given its modest franchise in a competitive industry, business volatility, reliance on wholesale funding and exposure to risks from its large investment portfolio, which is sensitive to capital-market movements and could undermine performance in a market downturn.
We expect ABCI's operating performance to remain volatile over economic cycles and its recent earnings to be affected by the weak capital market in
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A rating downgrade for ABCI could be triggered by a weakening in the linkage with its parent, which could result from significant dilution of
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
A rating upgrade is unlikely without a similar rating action for
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
The ratings on the two medium-term note programmes under Inventive Global Investments are in line with the rating on
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:
A downgrade of the IDRs on
Any change in Fitch's view on the effectiveness of the deed of guarantee given by ABC Hong Kong branch or ABCI may also result in a downgrade of the ratings on the programmes.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:
An upgrade of
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
The IDRs and SSR of ABCI are linked to
ESG Considerations
ABCI has an ESG Relevance Score of '4' for Financial Transparency as the disclosure of risks from its investment portfolio is considered less transparent, which has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
(C) 2023 Electronic News Publishing, source