PROVIDENCE – Moody’s Investors Service yesterday downgraded the credit rating of Citizens Financial Group Inc., the bank owned by beleaguered U.K.-based Royal Bank of Scotland Group plc, and warned it may do so again in the future, Dow Jones Newswires reported.
Moody’s reduced Providence-based Citizens’ financial strength rating by one notch to B and lowered the bank’s long-term deposit rating to A1, four steps down from the top rating of Aaa, Dow Jones reported.
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Moody’s downgraded Citizens’ rating outlook to negative in December, and yesterday further lowered the bank’s outlook to “on watch for further downgrade,” Dow Jones said. The ratings agency plans to estimate how far and for how long the company’s profits will fall.
Moody’s said the bank’s declining profits, low interest rates and rising expenses have “reduced its capacity to absorb losses at a time when the company is expected to continue to incur elevated credit costs.”
The ratings service noted that Citizens has increased its loan-loss provisions every quarter since the start of last year. Citizens’ riskiest loans are third party-originated home-equity loans, Moody’s said, but those account for only 6 percent of its balance sheet, Dow Jones reported.
Additional information is available at CitizensBank.com.
