Standard & Poor cut its outlook for Iceland to ‘negative’ from ‘stable’ yesterday, citing the increased risk of a hard landing for the economy.
Iceland’s sovereign credit ratings, however, remain unchanged. S&P affirmed Iceland’s A+/A-1 foreign currency and AA/A-1+ local currency issuer ratings.
The rating for Icelandic / Norwegian bank Glitnir is also unaffected by the announcement. S&P’s report concludes, “The ratings on [Glitnir] are underpinned by its strong domestic franchise, as well as by geographic diversification through its growing presence in Norway, Sweden, and Finland“.
S&P recognises “the bank’s consistently high profitability and current good asset quality, both in Iceland and elsewhere. The ratings continue to reflect S&P’s view that Glitnir Bank’s liquidity management is prudent and transparent, even though the bank remains highly reliant on wholesale foreign currency funding”.
S&P goes on to say that, “Given the bank’s increased geographical and product diversification, the ratings reflect our expectation that it should be able to maintain profitability at comfortable levels, despite Iceland’s challenging economic environment and the potential for higher loan losses and lower financial gains.”
Glitnir bank specialises in three global industry segments: seafood / food, sustainable energy and offshore services vessels, as well as offering universal banking and financial services. The Glitnir group is based in Iceland and Norway but also operates in Sweden, Denmark, Finland, Luxembourg, Russia, US, Canada, China, the UK and the US.