Moody's downgrades StanChart's long-term debt ratings

Moody's downgraded its rating on Standard Chartered's long-term debt on expectations the lenders' profitability would remain weak over the next two years and the more "challenging environment" in some of the markets in which it operates.

The ratings agency said: "the group is implementing a number of initiatives to reduce its credit risk and restore its profitability, including a reduction in risky exposures and a downsizing of its operations in some of its less profitable markets.

"However, Moody's expects profitability to remain weak for at least two years, and the operating environment in some of the markets in which Standard Chartered operates has become more challenging."

StanChart's senior unsecured debt rating was lowered by one notch from Aa2 to Aa3, with a 'negative' outlook, although the ratings on the bank's short-term deposits and debt was unchanged at P-1.

Asia-focused StanChart's asset quality and profitability had deteriorated "significantly" in 2015, due to its exposure to commodities and India, Moody's explained.

That had led to an increase in its problem loan ratio from 2.7% at the end of 2015 to 4.8% at the end of 2015.

As of 10:34 shares in StanChart were trading down by 3.62% to 468.6p.