Credit ratings agency Fitch has affirmed its ratings on two Irish financial institutions, citing the strong growth in the local economy in both cases.
In separate statements issued yesterday, Fitch affirmed its A+ rating on IIB Bank, reiterated its A rating for EBS Building Society and said the outlook for both groups' debt remained stable.
In the case of IIB Bank, Fitch said the rating reflected the bank's strategic importance to its Belgian parent, KBC Bank, as well as its consistent profitability, good asset quality and adequate capital.
"IIB has benefited from sustained growth in the Irish economy," Fitch said in the statement, adding that, after more than 30 years of net income growth, the bank expects further growth this year.
It also noted that IIB was probably a more cautious lender than many other institutions and, as a result, just 1 per cent of its residential mortgages were impaired at the end of March.
"In 2007, harsher market conditions may lead to a provisioning requirement, but impaired loans should remain small," it said.
Fitch also cited the EBS Building Society's low-risk, mainly residential mortgage portfolio in relation to the rating affirmation.
It said the building society's revised strategy of ensuring non-member business supports member business meant it should require less capital and produce a better balance between internal capital generation and risk-weighted assets.
It also cited EBS's diversification into third-party retail banking as a good sign for the business going forward.
"Asset quality is sound with low levels of arrears on both the residential and commercial portfolios," it said.
"Funding remains well diversified by maturity and product."
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