19.9.2025 14:52:35 CEST | Føroya Banki | Company Announcement
Company announcement no. 11/2025
Moody's Rating's downgrades Føroya Banki's issuer rating from A1 to A2 and affirms deposit rating while outlook remains negative. The updated ratings are as follows:
| Long-term Issuer Rating: | A2 (changed from A1) |
| Long-term Deposit Rating: | A1 (affirmed) |
| Long- and short-term Counterparty Risk Rating: | A1/P-1 (affirmed) |
| Long- and short-term Counterparty Risk Assessment: | A1(cr)/P-1(cr) (affirmed) |
| Baseline Credit Assessment and Adjusted BCA: | baa1 (affirmed) |
| Short-term deposit rating: | P-1 (affirmed) |
| Outlook for long-term deposit and issuer rating: | Negative (unchanged) |
The downgrade of the long-term issuer rating from A1 to A2 reflects the outcome of a forward-looking Loss-Given-Failure Analysis (LGF) of the bank's senior unsecured debt class. Føroya Banki has raised the CET1 target from 20% to 23%, while correspondingly reducing the need for MREL capital instruments. According to Moody's LGF scenario analysis, this composition of capital instruments results in a lower proportion of loss-absorbing cushion.
The affirmed negative outlook relates to an increase in the portfolio of loans to customers with infirm credit quality in 2024. This enhancement relates to a few customers, which for some of these customers the credit quality has improved since. After a period with inflation and ascending interest rates, the bank has not recognized any general heightening of the risk profile of the loan portfolio.
Further information
Arnhold Olsen, CFO, Tel (+298) 230 475, e-mail: ao@bankin.fo
