Ratings On HBAP And China Subsidiary Affirmed Despite Parent Downgrade; Outlook Stable

In our view, The Hongkong and Shanghai Banking Corp. (HBAP) is likely to manage its asset quality and credit costs reasonably well, backed by its tightened underwriting and risk management amid the challenging operating environment under COVID 19. Weaker earnings that will arise from higher credit charges will be exacerbated by the lower-than-anticipated interest rate environment. That said, we expect HBAP's dominant market position in Hong Kong, solid capitalization, and robust funding and liquidity profiles to underpin its stand-alone credit profile (SACP). We are affirming our 'AA-' long-term and 'A-1+' short-term issuer credit ratings on HBAP. We recently lowered the issuer credit ratings on HBAP's London-based parent, HSBC Holdings PLC, but the potential for extraordinary support from the Hong Kong

...May 18, 2020 - In our view, The Hongkong and Shanghai Banking Corp. (HBAP) is likely to manage its asset quality and credit costs reasonably well, backed by its tightened underwriting and risk management amid the challenging operating environment under COVID 19. - Weaker earnings that will arise from higher credit charges will be exacerbated by the lower-than-anticipated interest rate environment. That said, we expect HBAP's dominant market position in Hong Kong, solid capitalization, and robust funding and liquidity profiles to underpin its stand-alone credit profile (SACP). - We are affirming our '##-' long-term and 'A-1+' short-term issuer credit ratings on HBAP. We recently lowered the issuer credit ratings on HBAP's London-based parent, HSBC Holdings PLC, but the potential for extraordinary support from the Hong Kong government and HBAP's higher SACP than its parent, results in a higher rating for HBAP than core subsidiaries of the HSBC group outside Asia-Pacific. - The rating on HBAP...

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