April 27, 2024

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[THE INVESTOR] JB Financial Group said on July 26 Moody’s Investors Service has upgraded the credit outlook of its banking unit Jeonbuk Bank to reflect its improved asset quality and capitalization.

The US credit rating agency raised the Korean bank’s credit rating one notch up from Baa1 to A3, which qualifies as an “upper medium” grade and is considered investment-worthy.

The rating upgrade comes after JB Financial recently announced it will acquire another banking unit Kwangju Bank in a share swap deal in October. Following the deal, the bank will become JB’s wholly-owned subsidiary.

Moody’s also expressed expectations about JB’s full ownership of the banking unit, saying the holding company will further strengthen its financial stability to support other affiliates and help them elevate their valuations.

Depending on the expected synergies, the rating firm hinted it could consider further rating upgrades of both Jeonbuk Bank and Kwangju Bank, both now rated at A3.

“After completing our planned share swap deal with Kwangju Bank, we will ramp up efforts to further strengthen our credit outlook and competitiveness both at home and abroad,” said a JB Financial official.

JB Financial, the largest shareholder of Kwangju Bank with a 56.97 percent stake, said on July 13 it will acquire the remaining 43.03 percent stake in a share swap deal, under which a Kwangju Bank share will be exchanged for 1.8814503 shares in JB Financial.

Following the deal, local analysts estimate, JB Financial will see its return on assets and return on equity increase by 0.15 percent and 1.4 percent, respectively, while the debt-to-equity ratio will decrease by 3.6 percent.

By Lee Ji-yoon (jylee@heraldcorp.com)