Kroll Bond Rating Agency Europe Limited (KBRA) comments on Irish banks' 1Q 2020 earnings results and discusses the economic impact of the coronavirus (COVID-19) pandemic on the industry, although the long-term impact is uncertain and will depend on the depth and longevity of the crisis. In KBRA's view, the economic effects of COVID-19 will have a material impact on the sector's financial performance, with lower level of lending and business activity as well as higher level of impairments. KBRA expects asset quality to weaken and profitability to decline relative to our previous assessment.
That said, the Irish banking sector has seen material improvements over recent years and is now more resilient, with sound capitalisation, stable funding profiles, and strong liquidity providing solid loss absorption capacity. The banks have also substantially reduced their stock of nonperforming loans. While asset quality continues to be weaker than most European peers, the banks' track record of successful loan restructuring places them in a comfortable position to deal with pandemic-related stress. This time around, KBRA believes that Irish banks will be part of the systemic solution and are better prepared to support their customers and the economy through this crisis.
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Related Publications
- Irish Banks' 2019 Results: Asset Quality Improvements and Profitability Headwinds
- Republic of Ireland Surveillance Report
- Irish Banks: Continued Recovery Despite Headwinds
About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe Limited is located at 6-8 College Green, Dublin 2, Ireland.
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Contacts:
Analytical Contacts
Joanna Drobnik, CFA, Director
+353 1 588 1250
jdrobnik@kbra.com
Joe Scott, Managing Director
+1 (646) 731-2438
jscott@kbra.com
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Mauricio Noé, Senior Managing Director
+44 777 193 6570
mnoe@kbra.com
