LONDON, Jan 18 (Reuters) - Derbyshire Building Society, which has assets of 6 billion pounds ($11.8 billion), was put on review for possible downgrade by ratings agency Moody’s on Friday due to concern about profits and non-prime mortgages.
Derbyshire, Britain’s ninth biggest society, said the review was “disappointing but understandable” given current economic conditions. It said it was in “very good shape”.
Moody’s Investors Service said it had put the A2 long-term rating on Derbyshire on review. Such reviews usually take three months and indicate that there is a 50 percent or greater chance of a downgrade.
Moody’s said Derbyshire had relatively high exposure to specialised mortgage markets such as sub-prime, self-certification and buy-to-let. It said that while much of this exposure was of high credit quality, these market segments have not been tested in a significant downturn.
Derbyshire said it was in a strong financial position, managed its business prudently and “is in very good shape to deliver continued growth and increased value to our members”.
The society attracted record savings balances last year and 83 percent of its lending was funded by customer deposits, and 88 percent of its mortgages are prime, it said. Salt, its specialist lending brand, has grown strongly since being launched in November 2005.
Moody’s is also considering cutting its ratings on Bradford & Bingley BB.L and Alliance & Leicester ALLL.L.
For Moody’s full statement on Derbyshire, please double click on [ID:nWLB5960]. (Reporting by Steve Slater and Richard Barley; Editing by Paul Bolding)