Fitch Ratings has affirmed
The Outlooks are Stable.
The affirmation reflects Quilter's strong company profile, very strong capitalisation and leverage and good profitability.
Key Rating Drivers
'Moderate' Business Profile: We assess Quilter's business profile as 'Moderate' compared with that of other
Our assessment of Quilter's competitive positioning as one of the leading
Overall, assets under management and administration (AUMA) decreased to
Profitability Improving: Quilter's profitability improved in 1H22 as stable revenue and cost discipline led to an improved operating margin of 20% (1H21: 18%). As a result, adjusted profit before tax increased 9% to
The group's IFRS profit after tax from continuing operations increased to
Very Strong Liquidity Management: We believe Quilter's liquidity management is very strong, with sufficient liquidity at the holding company to meet debt servicing and other obligations under a 1-in-200 stress scenario. Holding company cash remained stable at
Very Strong Capitalisation and Leverage: We view Quilter's capitalisation and leverage as very strong. The group's Prism Factor-Based Capital Model (Prism FBM) score was 'Extremely Strong' based on end-2021 figures, unchanged from 2020's. The group's Solvency II (S2) ratio remained high at 219% at
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A sustained improvement in earnings, reflected by a ROE above 9% while maintaining a strong business profile could lead to an upgrade
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A decline in ROE to below 5% for a sustained period
Deterioration in business profile, as measured by a sustained weakening in Net Inflows or a weakening market position
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
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