Iceland review - 2006, Page 109

106 BUSINESS SUPPLEMENT BUSINESS SUPPLEMENT 107
GLITNIR’S RATINGS: GOING STRONG
Glitnir is the first Icelandic bank to receive a credit rating from
Standard & Poor’s (March 2006) and now has “single A ratings”
from all the major credit rating agencies. In March, Standard &
Poor’s (S&P) Rating Services announced Glitnir’s credit ratings
were: Long-term A-, short-term A-2, with a stable rating outlook.
Earlier, Moody’s and Fitch had announced their credit ratings of
Glitnir. Moody’s rating of Glitnir was Long-term A-1 and short-
term P-1. Fitch’s rating of Glitnir was Long-term A and short-term
F-1.
HIGH PROFITABILITY AND GOOD ASSET QUALITY
According to S&P, the ratings of Glitnir Bank reflect its strong domestic
franchise and improving geographic diversification through its growing
presence in Norway. S&P also recognizes the Bank’s 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.
With assets of 1.47 trillion krónur and market shares of 25 to 35 percent
in most key segments, Glitnir is the second-largest universal bank in
Iceland. Since 2004 the Group has built up a presence in Norway,
which now represents 40 percent of its loan portfolio. S&P view this
as favorable as it has improved the whole group’s credit risk profile by
providing exposure to low-risk mortgage lending.
S&P view Glitnir’s credit risk management as prudent and consider its
asset quality to be good.
A STABLE OUTLOOK
The stable outlook reflects S&P’s expectation that Glitnir will maintain
profitability at comfortable levels even in a less favorable economic
environment of higher loan losses and lower financial gains. S&P
anticipate that Glitnir will successfully integrate the Norwegian
operations into the group, thereby improving its revenue diversification.
It is also expected that risk management and control structures will
continue to be strengthened.
DIVERSIFICATION, A SOURCE OF STRENGTH
Bjarni Ármannsson, CEO of Glitnir, responding to the S&P, saying,
“We are pleased with this rating and that we now have ‘single A
ratings’ from all the major credit rating agencies. Glitnir Bank’s good
asset quality and prudent credit risk management and diversification
are sources of strength for the Bank. The acquisition of BNbank in
Norway strengthened the asset quality further as S&P points out.
We believe we can grow our specialist business and profitability. This
rating supports that.”
BUSINESS SUPPLEMENT
BJARNI ÁRMANNSSON