Standard & Poor's announces Glitnir Banks credit rating of A- (IS)

Standard & Poors Rating Services announced tuesday the credit ratings of Glitnir banki hf. (formerly Íslandsbanki hf.): Long-term A-, short-term A-2 and the rating outlook is stable.

Glitnir Bank is the first Icelandic bank to receive a credit rating from Standard & Poors. According to S&P, the ratings on Glitnir Bank reflect its strong domestic franchise and improving geographic diversification through its growing presence in Norway. S&P also recognises the Banks consistently high profitability and good asset quality. The ratings are constrained by the presence of some large single name lending concentrations, very rapid asset growth combined with an expansion strategy that could potentially raise the risk profile, and a heavy reliance on foreign wholesale currency funding.

Bjarni Ármannsson, CEO: We are pleased with this rating and that we now have single A ratings from all the major credit rating agencies. Glitnir Banks good asset quality and prudent credit risk management and diversification is a source of strength for the Bank. The acquisition of BNbank strengthened the asset quality further as S&P points out. We believe we can grow our specialist business and profitability. This rating supports that.

Tómas Kristjánsson, CFO: The rating is in line with our expectations, given both the sovereign rating and S&Ps rating of other Nordic banks. Glitnir Bank is rated one notch below banks such as SEB and Swedbank, and preserves the same spread of ratings between the agencies of those Scandinavian banks (see table). S&P points out that Glitnir Bank's liquidity management is prudent but raises concerns about reliance on wholesale funding in foreign currencies. This point has been highlighted by the other rating agencies over the years. The Bank focuses on minimizing that risk by emphasising the wide diversification of its investor base on the funding side.

Source: Glitnir Bank

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