OREANDA-NEWS. Fitch Ratings has affirmed Kiwibank Limited's (Kiwibank) Foreign and Local Currency Long-term Issuer Default Ratings (IDRs) at 'AA' and 'AA+', respectively. The Outlook has been revised to Stable from Positive. Kiwibank's Viability Rating has not been considered as part of this rating action. A full list of rating actions is at the end of this commentary.

KEY RATING DRIVERS - IDRs, SENIOR DEBT AND SUPPORT RATINGS
The affirmation of Kiwibank's IDRs, senior debt and support ratings reflect Fitch's view that the bank is a core subsidiary of New Zealand Post (NZ Post) and is ultimately a wholly-owned enterprise of the New Zealand sovereign (Foreign Currency Long Term IDR: AA/Stable). Fitch views that in times of difficulty, there is an extremely high likelihood of support from the sovereign through NZ Post. Additionally, NZ Post provides an explicit unlimited guarantee for the bank's unsecured debt including customer deposits. Kiwibank makes up the vast majority of NZ Post's balance sheet and net income. It accounted for 95% of NZ Post's assets and 89% of its net profit after tax at the financial year ending 30 June 2015.

The revision of the Outlook to Stable from Positive reflects the Outlook change of the sovereign rating on 26 January 2016. For more details, please see the rating commentary, "Fitch Revises New Zealand's Outlook to Stable; Affirms at 'AA'", published on 26 January 2016.

RATING SENSITIVITIES
IDRs, SENIOR DEBT AND SUPPORT RATINGS
Kiwibank's IDRs, senior debt and support ratings are sensitive to changes to NZ Post's and New Zealand's Long-Term Foreign and Local Currency IDRs, and in turn, the sovereign's willingness to provide support to the bank.

The rating actions are as follows:

Kiwibank Limited:
Foreign Currency Long-Term IDR affirmed at 'AA'; Outlook Revised to Stable from Positive;
Foreign Currency Short-Term IDR affirmed at 'F1+';
Local Currency Long-Term IDR affirmed at 'AA+'; Outlook Revised to Stable from Positive;
Local Currency Short-Term IDR affirmed at 'F1+';
Support Rating affirmed at '1';
Foreign currency senior unsecured rating affirmed at 'AA';
Local currency senior unsecured rating affirmed at 'AA+'; and
Commercial Paper Programme affirmed at 'F1+'.