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Asset quality was better than expected, with very low GCR calculated annualized credit losses (0.07%) and reduced GCR calculated non-performing loans (“NPLs”) reported at September 2021 (2% vs 3.1% at March 2020). Improved operating conditions and strong government support were amongst the key catalysts underpinning good asset quality. We believe the credit loss ratio may normalise between 0.15%-0.2% over the next two years once government support measures are curtailed.
The Stable Outlook reflects our view that ROA can be maintained at 0.8% over the rating horizon, underpinned by strong through-the-cycle asset quality, normalisation in costs and improved non-interest income supported by higher post-pandemic client transactional activity and strong revenue generation from the wealth and investment business.