Bank Credit Rating

The bank credit ratings are very important because they provide information about the creditworthiness of the banks. These ratings are provided by specific credit rating agencies after considering a number of related factors.

Bank credit ratings are provided by a number of credit rating agencies. These agencies are involved in the analysis of a number of factors to provide the overall score that is known as credit rating. There are a number of factors that are considered before providing credit rating to any bank or any other institution.

The credit ratings are mainly provided to those institutions or companies that offer debt obligation to the public. At the same time, there are a number of organizations including national governments that offer equities. These ratings reflect the risk factors. There are so many organizations that are providing these services but every organization does not have the same kind of return rate. Because of this, the ratings also differ. The bank credit ratings that are provided by the credit rating agencies, consider a number of other factors. There are a number of banks that are involved in offering bonds or mutual funds as investment services. The rate of return of every bank cannot be same. This is considered as one of the important factors for offering bank credit ratings.

Again the financial condition of the bank is also very important for these ratings. The deposits and the loan products that have been provided to the clients are important because all these are calculated as assets of the bank. These assets are responsible for maintaining the interest rates both on savings and loans.

There are some other factors that are also considered before providing bank credit ratings. Customer satisfaction is one of those factors. Banks with huge assets but failing to satisfy the customers get lower credit ratings than other banks.

Credit ratings are used by the investors to decide the creditworthiness of the financial institution. The creditworthiness in turn describes the chances of return of money. At the same time, security of the investment or the savings is necessary and this can also be assumed by the bank credit rating reports.

Some of the famous bank credit rating agencies are the following:
Moody’s (U.S.)
Standard & Poor’s (U.S.)
Fitch Ratings (U.S.)
Dominion Bond Rating Service

 

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Last Updated on : 9th July 2013

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