S&P affirms Landsbankinn’s credit rating as unchanged but revises outlook from stable to negative
On 23 July 2019, the international rating agency S&P Global Ratings affirmed Landsbankinn's long-term and short-term issuer credit rating of BBB+/A-2, but revised its outlook from stable to negative.
S&P's announcement refers, among other things, to challenges in the economic environment of Icelandic banks, pointing out that an economic slowdown is expected in 2019, together with falling interest rates, continuing high taxation and stiff competition from pension funds. All these factors are expected to negatively affect the Bank’s profitability. S&P also states that the Icelandic economy is expected to grow once more in 2020 and that an improvement in the Bank’s operating environment could mean an adjustment of the outlook to stable once more.
S&P's announcement mentions specifically that Landsbankinn's market share is higher than other Icelandic banks, and that its operations are both more efficient and more profitable.
It also points out that Icelandic banks have made good progress in digital development and IT, and are better prepared to face competition based on new technology than many other European banks. Furthermore, their market share is sound and their funding and liquidity are comparable to foreign banks.
S&P's announcement is available on the Bank's website, www.landsbankinn.com/credit-rating.