Tasmanian customer-owned bank Bank of Us (BOU) has announced that it has gained a corporate rating for the first time ever.
They have been assigned a Long-term Issuer Default Rating (IDR) of BBB+ and Short-term IDR of F2 by Fitch Ratings, allowing the bank to present themselves fully to external investors for funding.
The news is the next step for the only customer-owned bank on the island, and is built on years of growth from their Tasmanian customer base.
“We’ve been growing quite strongly for the last five years,” said CEO Paul Ranson. “We’ve averaged double digit growth in our loan book, and it’s just gone through a billion dollars. The pressure is always having adequate funding to support that growth.”
“What’s we’ve found is that historically, we’ve been strong in retail deposits, and what we want to do is to diversify where we get funding from so that we’ve got options.”
“Firstly, obtaining a corporate rating enables us to grow our potential market of investors who want to put funds into the bank and secondly, it enables them to be able to issue different products outside the retail space.”
For Ranson, this allows Bank of Us a greater flexibility to fund itself and offer new products to customers and members.
“It’s all about expanding our range of funding sources,” he said.
“More sophisticated investors, like super funds, like to have a diversity of places where they put their funding. Once you’ve got a corporate rating, there’s a degree of independence about the creditworthiness of a particular institution.”
“The market in Tasmania, where we are well known, is limited, so by getting that corporate rating, we can expand into that national market for potential funding.”
“Of course, the reality is that we’re not going to go out and raise huge amounts of funds without the loan book growth. We’ll gradually raise funds from the market if we don’t have the retail deposit growth to support it.”
