Irish Nationwide Building Society says it 'fundamentally disagrees' with recent rating downgrades from credit rating agencies Fitch and Moody's.
Fitch said today that the downgrades of some of the society's ratings reflect concerns about the uncertain outlook for commercial and residential property lending in Ireland and the UK. It said this has deteriorated further and faster than was anticipated in early 2008.
Today's downgrade comes after another agency, Moody's downgraded the society's ratings last week.
In a statement, Irish Nationwide said that the downgrades do not affect the underlying financial strength of the society. It said that during 2008 it has 'significantly' increased its liquidity and capital base. It said that both of these are critical in the present economic and financial climate.
'It is important to emphasise that the society is and continues to be a strong profitable financial institution and that profit budgeting projections are on target for the first half of 2008,' the statement adds.
Nationwide notes that it made more profits than the EBS, First Active, ACC and National Irish combined. It added that this year it believes it will also report more profits that those four institutions collectively.
Fitch said today that although INBS's level of bad debts are still fairly low, it is concerned that 'asset quality could deteriorate significantly if the outlook for this sector continues to worsen'.
Fitch says the increasing cost of funding on money markets, together with reduced revenue from lower volumes of business, has begun to affect profitability at the society. It adds, however, that INBS continues to benefit from 'strong cost efficiency, a liquid balance sheet, a large and historically stable retail deposit base and a satisfactory level of capital'.
The agency says INBS's loan portfolio is 80% focused on commercial lending, with 45% of total lending linked with property in the UK.
