11th Jul 2019 08:07
(Alliance News) - Tesco Personal Finance PLC's long-term local currency issuer and foreign currency deposit ratings were both upgraded by credit rating agency Moody's Investors Service on Wednesday.
Both were upgraded to a Baa1 rating after being previously classified as Baa2. Moody's said its ratings reflect the retail lender's "strong risk-weighted capital and leverage metrics", its profitability and its "solid diversified retail franchise", through grocery parent Tesco PLC.
The ratings agency praised Tesco Bank's decision to discontinue its mortgage lending programme as well as selling its mortgage portfolio, Moody's said this move is credit positive and would boost the bank's profit.
Moody's also bumped Tesco Bank's counterparty risk assessment score to A2(cr)/Prime-1(cr) from A3(cr)/Prime-2(cr) and its long-term counterparty risk rating to A3 from Baa1. Its baseline credit assessment and adjusted baseline credit assessment rating were upgraded to baa1 from baa2.
The agency said that it expects the bank to continue performing in line with its baa1 financial profile despite the UK operating environment weakening because of Brexit.
This upgrade comes shortly after Moody's also boosted parent company Tesco's investment grade to Baa3, citing a stable outlook.
Related Shares:
Tesco