S&P Global ratings affirmed its credit rating of Credit Union South before withdrawing the BB-/B at the issuer’s request.
S&P said in a statement at the time of the withdrawal, the outlook on the ratings was stable.
"The ratings on CU South reflected our expectation the credit union will maintain very strong capitalisation. It was around 15.8% according to our risk-adjusted capital ratio as of June 30."
CU South was expected to remain a small lender in New Zealand, focused on personal loans and residential mortgage loans to lower-income members, S&P said.
Those characteristics exposed the credit union to higher through-the-cycle loss rates and competition from larger, more diversified competitors.
Also, S&P considered CU South’s material programme of change, including multi-year technology investments, exposed it to heightened operational risk, relative to peers, although risk was likely to moderate as implementation progressed.
CU South chief executive Tania Dickie said the reason for the withdrawal was because the credit union had moved to a Fitch rating. As part of the exit strategy, S&P had to reaffirm its rating and withdraw. Earlier, the credit union reported an operating surplus for the year ended June of $461,000, up from $338,000 reported in the previous corresponding period.
Total operating revenue fell slightly to $18.32million from $18.9million in the pcp.
