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Fitch upgrade to BBB with stable outlook

Today, Fitch Ratings upgraded Íslandsbanki to BBB/F3, from BBB-/F3, with stable outlook.

Today, Fitch Ratings upgraded Íslandsbanki to BBB/F3, from BBB-/F3, with stable outlook.

According to Fitch the upgrade is driven by the continuous strengthening of the Icelandic operating environment as reflected in the extended record of robust economic growth, combined with an improved external position. Fitch recently revised the outlook on Iceland’s sovereign rating to Positive and affirmed its BBB+ rating.

The upgrade also reflects the Bank’s successful track record of re-building a solid balance sheet, including successfully restructuring a large share of its loan book and managing down legacy funding and trapped deposits in an orderly fashion.

Jón Guðni Ómarsson, Chief Financial Officer:
“A great emphasis has been placed on the asset side of Íslandsbanki’s balance sheet in recent years. Restructuring of the loan portfolio is now finalised, the non-performing loan (NPL) ratio continues to decline and only a negligible share of loans is non-performing after restructuring. Íslandsbanki has maintained extraordinary levels of capital and liquidity in preparation for possible adverse effects that may stem from the full lifting of capital controls.

The Icelandic operating environment has remained resilient and the Bank’s fundamentals remain very strong. In that light, Íslandsbanki decided to take steps to optimise its capital base and paid out an extraordinary dividend of ISK 27bn in December 2016. Access to international capital markets is good and the Bank is now fully market funded. The rating upgrade from Fitch to BBB/F3, and the upgrade from SP Global to BBB/A-2 in October 2016, is well aligned with these developments.”