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Standard and Poor’s has affirmed Defence Bank’s credit rating as BBB/Stable/A2 – one of the highest S&P ratings assigned to only a select few mutual banks in Australia. The announcement comes as welcome news to members, during tough economic times.
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The ratings agency noted Defence Bank’s "low-risk residential mortgage book, supported by stable employment and repayment prospects for active Australian Defence Force personnel in times of economic stress". As an essential service, ADF members enjoy more secure employment prospects than the average Australia during downturns, which the report said "translate into through-the-cycle earnings resilience and stability".
The bank was also endorsed for its high liquidity ratio, which S&P believed to be sufficient to manage more than six months of market stress without a material dependence on central bank or government support.
Defence Bank chief executive David Marshall said, “Today’s announcement from S&P is an endorsement for our bank, our dedicated people and very importantly, our loyal members.
“Over the last 12 months, we achieved an increase in profit, improved asset growth by 2.5 times greater than the system, increased deposit holdings, welcomed 4,500 new members and delivered record investment in our products and member service.
“Defence Bank is extremely well-positioned to withstand the current challenges and today’s announcement from S&P is significant tangible evidence of that. The S&P report considers that if Australia is to experience a protracted period of deteriorating economic conditions, Defence Bank's credit loss and non-performing asset experience would outperform peers' to a greater degree than they have in the past five years.
“We are deeply committed to our members and are supporting them and here for them. At a time of crisis for the nation, more than even Defence Bank will live up to its commitment of ‘serving those who protect us’.”
