S&P wary on Wide Bay

Standard & Poor's said yesterday that it had revised its outlook on Wide Bay Australia to negative from stable.

Bundaberg-based Wide Bay, a listed building society, has a long-term credit rating of BBB and a short-term rating of A2.

S&P said the negative outlook "reflects our rising concerns around Wide Bay's ability to protect its revenue base, noting that the loan portfolio and member numbers have both contracted over the past two years."

"We note that through its revised strategy, the new management team at WBA is taking initiatives to improve the business volumes.

"Nevertheless, we believe that the management will be challenged to arrest the negative momentum without embarking on a higher-risk strategy, reflected in its target business segments, products, or regions."

S&P said the most likely trigger for a downgrade would be a "potential reassessment that WBA's business position has worsened.

"This is likely to happen if, in our opinion, WBA's strategic initiatives fail to stabilise the building society's loan book and member numbers, or should WBA's financial metrics, including its core earnings to adjusted assets and cost-to-income ratio, not improve from their December 2012 levels," the ratings agency said.