Standard & Poor’s Global Ratings has revised HSBC Bank Bermuda’s credit rating outlook to stable from negative, citing improving signs in the island’s economy.

The ratings agency added that there was “no recent indication from its parent that it is less committed to doing business in Bermuda” after a global review of its operations.

S&P affirmed its A-/A-2 issuer credit ratings on the bank.

“We continue to see encouraging recent indicators in the territory [Bermuda], including positive real growth in GDP in each quarter (quarter/quarter) since fourth-quarter 2017,” the report states.

“Economic improvement, if persistent, should help stem further asset quality problems and perhaps help the bank more quickly work through its currently high levels of non-performing assets (NPAs).”

The report adds: “Risk regarding the negative competitive pressure on Bermuda (a low-tax jurisdiction) from the recent decrease in the US corporate tax rate appears to be fading, and we do not expect en masse departures of insurers and reinsurers that constitute Bermuda’s economic bedrock, although we expect consolidation in those sectors to continue gradually.

“Major construction projects (such as the airport renovation) are also boosting employment and income, temporarily.”

Bloomberg News reported in April last year that the global bank was “mulling an exit from smaller consumer operations such as Bermuda, Malta and Uruguay”. S&P’s report suggests that the bank has opted to stay in Bermuda.

A global strategy update by HSBC Holdings “appears to have concluded without meaningfully reducing the strategic importance of HSBC Bank Bermuda to the group”, S&P added.

S&P added: “We believe the likelihood that future capital payouts to the parent are as high a share of annual net income as the amounts paid in 2016 and certain previous years is also lower.”

The report also cites the bank’s healthy capital ratios and adds: “Although we do not believe Bermuda to be one of HSBC’s priority growth markets, and HSBC Bermuda is small as a share of the group, the bank is wholly owned by its parent, uses its parent’s branding, and has a leading market position within Bermuda.

“Moreover, we think customers’ belief that HSBC stands behind its subsidiaries is important to the parent’s global franchise.”