Moody's Upgrades DBS Bank (Taiwan) Ltd's Deposit Ratings to A1, Affirms Stable Outlook

Strategic Insights -

Moody's Investors Service has upgraded DBS Bank (Taiwan) Ltd's foreign currency and local currency long-term deposit ratings to A1 from A2, citing the bank's strengthened financial profile and its strategic importance to its parent, DBS Bank Ltd. The upgrade reflects the bank's improved profitability, asset quality, and capitalization, as well as its willingness and capacity for affiliate support from its parent. The stable outlook on the long-term deposit ratings reflects Moody's expectation that the bank will maintain a stable financial profile over the next 12-18 months.

Key Takeaways:

  • Moody's upgraded DBS Bank (Taiwan) Ltd's foreign currency and local currency long-term deposit ratings to A1 from A2, citing the bank's strengthened financial profile.
  • The upgrade reflects the bank's improved profitability, asset quality, and capitalization, as well as its willingness and capacity for affiliate support from its parent DBS Bank Ltd.
  • DBS Taiwan's adjusted Baseline Credit Assessment (BCA) was upgraded to a1 from baa2, while its adjusted Counterparty Risk Rating (CRR) was upgraded to a1 from a2.
  • The bank's stable outlook reflects Moody's expectation that DBS Taiwan will maintain a stable financial profile over the next 12-18 months.
  • DBS Taiwan's moderate profitability is expected to be supported by continued growth of net interest income, with good net interest margin and moderate loan growth in 2025.
  • The bank recorded substantial improvement in profitability in 2024, with reported return on average assets increasing to 0.55% from 0.16% in 2023.
  • DBS Taiwan's impaired loan ratio declined to below 2% as of year-end 2024, from a level exceeding 2.3% as of year-end 2023.
  • DBS Taiwan's reported return on equity improved to 5.4% in 2024 from 1.7% in 2023, and it pays no dividends to its parent bank.

Statistics:

  • Total assets of DBS Bank (Taiwan) Ltd: TWD922.5 billion (or USD28.1 billion) as of 31 December 2024.
  • Reported return on average assets: 0.55% in 2024, up from 0.16% in 2023.
  • Reported return on equity: 5.4% in 2024, up from 1.7% in 2023.
  • Impaired loan ratio: below 2% as of year-end 2024, down from a level exceeding 2.3% as of year-end 2023.
  • Tangible common equity (TCE)/risk weighted assets (RWA): above 11% as of 31 December 2024.

Sources:

  • Moody's Investors Service
  • Banks (Moody's)
  • Rating Methodologies page on https://ratings.moodys.com