Standard & Poor’s says it is en-couraged by the progress made by Lloyds Banking Group and the Royal Bank of Scotland on their recovery plans, despite shares in the two banks falling almost 6% last Tuesday.
The ratings agency has affirmed the credit ratings for the two state-backed banks and awarded them a stable outlook. It has also raised the standalone credit profiles for the banks’ brands from BBB to BBB+.
Nigel Greenwood, credit analyst at S&P, says: “These affirmations reflect our view of the progress made by Lloyds group and RBS regarding their turnaround plans.
“The stable outlooks reflect our view that these companies will continue to make good progress against their strategic targets.”
A statement from S&P says that although the two banks have more to do and the external environment continues to pose challenges, they have laid the foundations of improving performance and are making progress on strengthening their balance sheets.
Lloyds group and RBS are in the process of overhauling their busi-nesses following support from taxpayers in 2008 which saw the government end up with a 41% stake in Lloyds group and an 83% holding in RBS.
S&P says their progress, particularly in terms of impairment losses, is ahead of its expectations and reflects less fragile economic trends than it had forecast.