AMP Bank's struggle to remain competitive in the Australian retail lending and deposit markets has taken another hit after Standard & Poor's lowered its credit ratings on Tuesday.In a move likely to increase the bank's wholesale funding costs for several years, S&P pared the long term issuer rating on AMP Bank to "BBB+" from "A-" as part of a wider downgrade of the credit standing of the AMP group.It is second time that S&P has cut AMP's ratings this year following the move in early March to lower the single A rating by one notch.S&P cited the weakened earnings profile of AMP Life as a key factor in its decision to lower the credit ratings of the group and the bank.It is concerned about the likelihood that AMP will eventually offload the life operation to Resolution Life despite moves earlier this year by New Zealand regulators to scupper the deal.  "The lowering of the group credit profile and negative outlook reflects AMP Life's weaker capital and earnings profile and our view of an expected weakening of the AMP group's creditworthiness post divestment of AMP Life due to a reliance on lower-rated operating subsidiaries and decreased diversification," the ratings agency said."We consider that the bank would be a likely recipient of implicit support from the AMP group(if needed) because of the bank's strategic importance to the group."Consequently, the weakened capacity of the group to provide this support impacts on the bank's overall credit quality."S&P has a negative outlook on the bank's creditworthiness because it sees further downward pressure on the AMP group's capital position from potential fines, legal action, and customer remediation programs.The negative outlook is also linked to risks associated with implementation of the group's new business strategy."The downward rating pressures on the group therefore flow through to our view of creditworthiness of the bank within the wider AMP group as the external support the bank receives is likely to decline in such a scenario," S&P said."We would likely lower our rating on the bank over the next year if the creditworthiness of the bank's parent, AMP Ltd, and its guarantor, AGHL, weaken following the divestment of AMP Life." While AMP Ltd said in an ASX filing that the ratings changes "were not material" for the group, the reality is that it could intensify funding pressures on the banking arm. AMP Bank is among a handful of banks that managed to defy the seasonal outflow of retail deposits in June.That is mostly due to its aggressive pricing of bonus saver and some term deposit products, which appear to be winning favour with customers.The dilemma facing AMP's senior management is that the bank probably stands little chance of maintaining momentum in the deposits market if it is unable to pay out more to depositors than other banks.AMP Bank suffered a 9 per cent fall in first half profit this year and the trend might be difficult to arrest given that the company still remains  largely dependent on wholesale funding to support