Volkswagen Bank GmbH

The stable outlook reflects our view that VW Bank will maintain fairly steady financial performance over the next two years and very strong capitalization, while continuing to play an important role in VW's value proposition. We view a downgrade a remote scenario as long as parent VW maintains its credit strengths. We would only consider downgrading VW Bank if we observed that its strategic relevance to the group, expressed in its core group status, had weakened along with its stand-alone creditworthiness. A negative rating action on the parent alone would likely not lead us to downgrade the bank, reflecting our assessment of it as an insulated entity. We would consider an upgrade if an improving credit profile for the parent

...Volkswagen Bank GmbH's (VW Bank's) strong earnings and product offering is supporting VW Group's electrification strategy. As a fully owned captive finance subsidiary of German car producer Volkswagen AG (VW; ###+/Stable/A-2), VW Bank has a core strategic business purpose of promoting the sale of products of the group, including support to VW dealers and stronger customer relationships. S&P Global Ratings does not expect this role to change in the foreseeable future, but rather be strengthened by the important role of promoting the sale of electric vehicles, a clear focus for the group. The expected annual transfer of local GAAP profits of about 400 million-500 million will help support the industrial transformation. VW Bank's very strong capitalization will remain its main rating strength. We project the bank's capitalization to remain very strong, with an expected S&P Global Ratings risk-adjusted capital (RAC) ratio of 21%-22% over 2023-2024, somewhat below the 22.5% as of end-2022. We...

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