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Standard & Poor’s announces ‘BBB’ rating for Big Sky Building Society

14 Jul 2015
Standard & Poor’s has rated Big Sky Building Society at ‘BBB’, the first time a credit rating has been issued for the business.

Robert Bell, chief executive officer of Big Sky Building Society, said that the rating reflects the strength of the organisation and supports its ongoing growth strategy.

“Receiving our first credit rating is a vital step in achieving our long-term goals, and will lead to further opportunities for us.

“Building societies increasingly have an important role to play in the Australian banking sector and Big Sky is ideally placed to capitalise on its recent expansion and evolution to provide a real alternative to the big banks,” Mr Bell said.

In its report, Standard & Poor’s said that the rating “reflect[s] the building society’s very strong capitalization, and its good loss experience in line with its focus on low-risk residential mortgages”. It also stated: “We note that Big Sky has achieved an above-system loan growth of 13.8 percent in fiscal 2014 and 4.8 percent in the eight months to Feb. 28, 2015. We believe that Big Sky benefits from its mutual, for-the-member business model, which appeals to a section of the Australian society.

“We believe Big Sky should benefit from its management team that has professional experience in the banking business, although it is relatively new to the building society. In our view, this team should assist the building society in articulating and executing its strategy, so that it achieves its goal to more closely align its products and services with its parent group, AUL. Furthermore, Big Sky is able to leverage off the wider group's expertise in a number of areas such as technology, treasury, and human resources.”

Standard & Poor’s added that “… our stable funding ratio measurement for Big Sky is well positioned at 112 percent (against an estimated system average of 92 percent), while the building society's customer loans-to-customer deposits ratio of 89 percent also compares favourably with an estimated system average of 135 percent.

“The stable outlook reflects our view that Big Sky Building Society Ltd.'s (Big Sky) rating should remain unchanged in the next two years even if there is a modest weakening in its stand-alone credit profile (SACP), because we expect that it would be offset by a ratings uplift reflecting support from the Australian Unity Ltd. (AUL; not rated) group,” the report said.

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