The ratings on BHW Bausparkasse AG, Hameln (BHW) reflect the bank's strong asset quality and excellent credit loss track record, its stable and still relatively cheap deposit base, combined with its satisfactory capitalization. The rating takes into account delayed improvements in the bank's bottom line profitability, resulting in high cost-to-income ratios, which continue to compare unfavorably by international standards, declining capital strength, and an intensified competitive environment. Other rating factors include the business limitations imposed by the German Buildings Savings Bank Act (Bausparkassengesetz) and the dependence on the level of various state support schemes favoring the investment in Bauspar savings products and the creation of home ownership in Germany. Standard&Poor's believes that alternative investment and savings products (such
