G&C a rare bird amid credit fuss

In what must surely be the last credit upgrade for an Australian bank in a long time, S&P Global Ratings raised its long-term and short-term issuer credit ratings on G&C Mutual Bank to BBB from BBB-.

S&P moved G&C's short-term rating to A-2 from A-3.

David Taylor, CEO of G&C Mutual Bank said it was "nice to get some positive news amidst all the doom and gloom.

"We're also especially pleased that they've referred specifically to our success in diversifying our business away from housing into other asset classes, which includes strata lending and medical equipment financing."

These represent around 9 per cent of assets, and this segment doubled over a year.

Growth in non-mortgage lending "will help G&C maintain its profitability in light of continued margin compression and heightened competition across Australia's residential mortgage lending market," S&P said.

With $1.2 billion in assets G&C is at the smaller end of the mutual bank cohort, but the most efficient, with a cost to income ratio of 64.7 per cent, around 12 percentage points less the median of its peers.

Taylor told Banking Day yesterday "while everyone's worried depositors will take money out of smaller banks, we seen no evidence of that."