Elders Rural Bank upgraded

Standard & Poor's yesterday said it raised its long-term issuer credit rating on Elders Rural Bank to BBB from BBB-. S&P raised ERB's short-term issuer credit rating to A2 from A3. The rating outlook is stable.
 
"The rating upgrades reflect solid and sustained growth in the bank's assets, income, and capital base in recent years, which has been achieved without a material deterioration in asset quality, despite the drought," Standard & Poor's credit analyst Sharad Jain said. "Although there has been a steady decline in interest rate margins, this is an industry trend. The bank's credit profile has also improved due to strengthened risk-management capabilities, which lessens the concerns of start-up risks."
 
The issuer credit ratings on ERB reflect the bank's very low loan losses, strong rural market expertise, very good interest margins, and geographic diversification within Australia. ERB is jointly owned by Futuris Corp. Ltd. (not rated) and Bendigo Bank Ltd. (BBB+/Positive/A-2).
 
The stable outlook on ERB reflects Standard & Poor's view that ERB's specialist expertise in the Australian agricultural sector and risk-management capabilities are adequate to cope with the higher risks and cyclicality inherent in the segment in which it operates.