OREANDA-NEWS. Fitch Ratings has affirmed the ratings of Taishin Financial Holding Co., Ltd. (TFHC) and its subsidiaries, Taishin International Bank (TIB) and Taishin Securities Co., Ltd. (TSS), all of which have Stable Outlook. A full list of ratings is provided at the end of this commentary.

KEY RATING DRIVERS

IDRS, NATIONAL RATINGS AND VIABILITY RATINGS

The affirmation of TFHC is in line with the rating action on its principal banking subsidiary - TIB. TFHC is rated one-notch below TIB's rating to reflect Fitch's view that TFHC may have a higher appetite for leverage and its double leverage ratio could vary markedly with an appetite for opportunistic growth and acquisitions.

TIB's affirmation and Stable Outlook reflect its manageable risk profile and strength in consumer finance that helps generate robust earnings to underpin the group's capital accumulation. Fitch expects TIB's profitability to weaken over 2015-2017 amid the softening domestic property market and China's economic slowdown. Fitch forecasts credit cost to rise modestly and interest margins to come under pressure as the strong growth in higher-yielding lending to China and home-equity loans wanes.

The ratings of TSS are aligned with its parent TFHC, reflecting its status as a core subsidiary of TFHC, the obligatory support from TFHC under the Taiwan's Financial Holding Company Act and the inseparability of TSS's profile from that of TFHC.

SUPPORT RATING AND SUPPORT RATING FLOOR

The Support Ratings (SR) and Support Rating Floors (SRF) of TIB reflect its moderate systemic importance and moderate probability of state support, if needed.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

TFHC's subordinated bonds are rated three notches below the issuer's National Long-Term rating, reflecting the bonds' going-concern loss-absorption mechanism. TIB's subordinated bonds are rated one notch below the issuer's National Long-Term rating to reflect their subordinated status and the absence of the going-concern loss-absorption feature.

RATING SENSITIVITIES

IDRS, NATIONAL RATINGS AND VIABILITY RATINGS

Downward rating pressure is likely, if TIB pursues its above-trend growth for an extended period or TFHC pursues large-scale acquisitions that lead to weakening of the group's capital buffer. Rating pressure would also build if credit migration towards mid- to high-risk borrowers becomes evident and notably weakens its risk profile.

Any changes in TIB's ratings will affect the ratings of TFHC and TSS to a similar extent. TFHC's ratings will be aligned to those of TIB if it establishes a track record of prudent use of leverage by maintaining its double leverage ratio consistently on par with or below those of the sector peers.

SUPPORT RATING AND SUPPORT RATING FLOOR

The SR and SRF are sensitive to any change in assumptions around the propensity or ability of the Taiwan government to provide timely support to the bank. This would most likely be manifested in a change to Taiwan's sovereign rating (A+/Stable).

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

Any rating action on TFHC and TIB could trigger a similar move on their debt ratings.

The rating actions are as follows:

Taishin Financial Holding Co., Ltd.:

Long-Term IDR affirmed at 'BBB'; Outlook Stable;
Short-Term IDR affirmed at 'F3';
National Long-Term rating affirmed at 'A+(twn)'; Outlook Stable;
National Short-Term rating affirmed at 'F1(twn);'
Viability Rating affirmed at 'bbb'; and
Subordinated debt rating affirmed at 'BBB+(twn)'

Taishin International Bank:

Long-Term IDR affirmed at 'BBB+'; Outlook Stable;
Short-Term IDR affirmed at 'F2';
National Long-Term rating affirmed at 'AA-(twn)'; Outlook Stable;
National Short-Term rating affirmed at 'F1+(twn)';
Viability Rating affirmed at 'bbb+';
Support Rating affirmed at '3';
Support Rating Floor affirmed at 'BB+'; and
Subordinated debt rating affirmed at 'A+(twn)'

Taishin Securities Co., Ltd.:

Long-Term IDR affirmed at 'BBB'; Outlook Stable;
Short-Term IDR affirmed at 'F3';
National Long-Term rating affirmed at 'A+(twn)'; Outlook Stable; and
National Short-Term rating affirmed at 'F1(twn)'.