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Jun 28 2019, 07:30 IST/BST
Ratings and price correct at time of issue
|Company||Rating||Date||Previous Rating||Date||Closing Price|
|Bank of Ireland||OUTPERFORM||11/03/13||Neutral||14/08/12||468c|
|permanent tsb Group||NEUTRAL||06/03/19||Outperform||01/08/18||126c|
The seismic shift in the interest rate outlook fundamentally challenges all banks’ core business models as lower-for-longer interest rates impair profitability from maturity transformation. We reduce our earnings forecasts to reflect the negative impact of lower reinvestment rates on Treasury portfolios and structural hedges, the pass-through to business lending rates and a flat outlook for tracker mortgage rates with only modest liability offsets. Downside risks remain from unchartered interest rate territory such as possible cuts to tracker mortgage rates and mortgage competition. In addition, it is too early to consider offsets from either lower impairments or operating costs.