Islandsbanki hf. : Íslandsbanki assigned BB+/B ratings with stable outlook from S&P
Íslandsbanki is well positioned in the Icelandic financial market with strong market share of 30-40% in most business lines despite being the smallest of its three domestic peers by assets, according to a rating assigned to Íslandsbanki by Standard & Poor's today.
S&P rates Íslandsbanki as BB+/B with stable outlook. This is a satisfactory result, especially in light of the fact that it is only one notch below the rating assigned to the Icelandic Sovereign.
In their research update, S&P note that two-thirds of the Bank's revenues come from net interest income, and has diverse revenues from the Bank's business segments. They also note that the strategic acquisitions in 2011-12 have improved the Bank and support their view of the Bank's management and strategy.
In their view, Íslandsbanki is diligently preparing its balance sheet for the eventual relaxation of capital controls by building an exceptional funding and liquidity buffer, and note that the Bank's leverage ratio is exceptional in a global comparison.
S&P also note that the Bank continues to reduce its non-performing loans and maintain ambitious goals in the next few years. At year-end 2013, the Icelandic loan portfolio analysis ratio (LPA) of loans under restructuring was 8.3%, compared to an average of 12.5% for Iceland's top three banks at YE13.
Birna Einarsdóttir, CEO of Íslandsbanki:
We are pleased with the rating outcome, especially as it is only one notch below the rating assigned to the Icelandic Sovereign. It seems unlikely that credit ratings for Icelandic banks will improve until we see a positive rating action for the Icelandic Sovereign. This is an important objective that all relevant stakeholders must address together.
The assigned rating from S&P recognises that the strategic direction we have followed in the last few years has been fruitful. Today, Íslandsbanki is well funded and a credit rating will further ease market access to international capital markets and allow is to better serve our customers who are engaged in international trade and need foreign currency funding. That is the way we best fulfil one of the key role for the Bank. Namely, to channel funds for investment and support the continued growth of the Icelandic economy.