S&P Global Ratings affirms BBB+/A-2 rating for Íslandsbanki but changes outlook to negative
Today, S&P Global Ratings (S&P) has affirmed Íslandsbanki's rating of BBB+/A2 but has changed the outlook from stable to negative.
In its report, S&P refers to Íslandsbanki’s stable domestic market position and acknowledges the Bank’s success in introducing new digital products and improving its IT infrastructure, placing Íslandsbanki well ahead of many other European banks. S&P also notes the Bank’s exceptional capitalisation, strong liquidity levels and robust asset quality.
S&P’s rational for the change to negative outlook is mostly derived from its view that Iceland's operating environment will remain challenging, affected by the 2019 economic recession, declining interest rates, still-high taxation, and stiff competition from pension funds in mortgage lending, and thus contributing to the declining profitability of the Bank. S&P notes that it could revise the outlook to stable again if economic and operating conditions improve and/or if earnings prospects for the Bank become better. The rating agency also notes it could lower the ratings on the Bank over the next 24 months if the operating environment in Iceland becomes more difficult.
In light of this, Íslandsbanki would like to reiterate its view that it is the responsibility of the government to ensure that taxes and levies on financial institutions are not too onerous and do not undermine banks’ competitive positions vis-à-vis other financial institutions at home and abroad. Taxes on commercial banks are still many times higher in Iceland than in neighbouring countries. This is unfortunate in an environment where pension funds and fintech companies are now competitors without having to pay levies to the government at a rate comparable to those paid by commercial banks. Competition is a good thing, but it is vital to maintain a level playing field for all.
For further information:
Íslandsbanki press releases
If you wish to receive Íslandsbanki press releases by e-mail please register at https://www.islandsbanki.is/en/landing/about/investor-relations
About Íslandsbanki
A leader in financial services in Iceland, Íslandsbanki is a universal bank with total assets of ISK 1,205bn and a 25% - 50% market share across all domestic business segments. Building on over 140 years of servicing key industries, Íslandsbanki has developed specific expertise in tourism, seafood and energy related industries. Driven by the vision to be #1 for service, Íslandsbanki’s relationship banking business model is propelled by three business divisions that manage and build relationships with the Bank’s customers. Íslandsbanki has developed a wide range of online services such as the Íslandsbanki and Kass apps, enabling customers to do their banking whenever and wherever. At the same time, the Bank continues to operate the most efficient branch network in Iceland through its strategically located 14 branches. For the sixth consecutive year, Íslandsbanki led the Icelandic Customer Satisfactory Index for banks in 2018. Íslandsbanki has a BBB+/A-2 rating from S&P Global Ratings. www.islandsbanki.is
Disclaimer
This press release may contain “forward-looking statements,” involving uncertainty and risks that could cause actual results to differ materially from results expressed or implied by the statements. Íslandsbanki hf. undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. It is the investor's responsibility to not place undue reliance on these forward-looking statements which only reflect the date of this press release. Forward-looking statements should not be considered as guarantees or predictions of future events and all forward-looking statements are qualified in their entirety by this cautionary statement.