S&P stabilizes view on two Irish banks

S&P said it revised its outlooks for Bank of Ireland Group plc and AIB Group plc to stable from negative and affirmed their ratings.

“Irish banks are delivering on their cost reduction and earnings diversification strategies, while ongoing industry consolidation and rising interest rates will also help banks in their efforts to improve profitability.

“The reduction of Irish banks' legacy nonperforming exposures (NPEs) continues, and we consider potential asset quality problems yet to emerge from the pandemic and the Russia-Ukraine military conflict as manageable, given Ireland's solid growth prospects, low private sector indebtedness, and banks' prudent underwriting standards,” the agency said in a press release.

“We also think Irish banks are on track to grow their revenue streams after widening their product offering and diversifying revenue sources over the past year by cooperating more closely with insurance companies and stockbrokers. Moreover, anticipated sector consolidation following NatWest's and KBC's exit from the Irish market, along with rising interest rates, should further support banks' topline results, in our view,” S&P added.

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