Tuesday, November 22, 2016

Melbourne, Tuesday, 22 November 2016 – Australia Ratings has reviewed and affirmed its credit rating of ‘BBB+’ of the Heritage Bank Retail Bonds (the Bonds). This rating is the highest long-term rating in the intermediate category of creditworthiness on the rating scale of Australia Ratings. The Bonds are senior and unsecured debt obligations of Heritage Bank Limited. 

Australia Ratings also confirmed its product complexity indicator of ‘GREEN’ on the Bonds, indicating the Bonds to be a debt investment with simple and straight forward terms and conditions. A coupon of 7.25% p.a. is payable quarterly in arrears until maturity of the Bonds in June 2017.

Australia Ratings’ credit analyst, Chris Dalton said “the ‘BBB+’ rating of the Bonds reflects the credit quality of Heritage Bank”. Mr Dalton added “earnings and profitability increased in financial year 2016 in line with expectations and reflects ongoing competition in the residential loan market. Heritage’s performance in keeping down arrears remains exemplary with only 0.30% of loans in arrears as at 30 June 2016. Heritage continues to execute a consistent business strategy. Based on the current economic outlook and the business and financial risk profile of Heritage, the rating is expected to remain unchanged before the bonds’ maturity date in 2017”.

The credit rating reflects the following key strengths of Heritage Bank’s business:

  • a high quality, low risk portfolio of residential mortgages with below industry average arrears and losses;
  • a conservative risk appetite with regard to maintaining capital and liquidity above regulatory capital requirements; and
  • a diversified funding base with experience and capability in raising funds via both wholesale and retail markets.

The credit rating also reflects the following key risks to Heritage Bank’s business:

  • a slowing of demand and increased competition in the residential mortgage market which may constrain earnings growth; and
  • a reliance upon retained earnings to build capital base for future asset growth; and geographic concentration of the mortgage loan portfolio in Queensland.

A GREEN Product Complexity Indicator designation indicates the Bonds’ terms and conditions are simple and straightforward with a very low level of complexity on Australia Ratings’ five point Product Complexity Indicator scale.Re

A full rating report is available from

For more information contact:
Chris Dalton, Managing Director
Tel:  03 8080 6684



© Copyright 2017 Australia Ratings. All Rights Reserved
Site developed by manageWeb
This website is published by Australia Ratings Pty Ltd (ABN 90 141 393 375), holder of AFS licence 346138 and Australia Ratings Analytics Pty Ltd (ABN 95 616 254 294), holder of AFS licence 494552. The information contained in this website is of a general nature only, and does not take into account your objectives, financial situation and needs. You should consult your own professional advisers before making an investment decision.