... Building Society's (YBS) ratings reflect its stable but undiversified business model, prudent underwriting standards, healthy asset quality, solid capitalisation, and sound funding and liquidity profile. YBS's franchise in UK residential mortgages is modest and its pricing power is limited. Revenues consist almost entirely of net interest income and Fitch views the monoline business model as a rating constraint. Supportive Economic Environment: UK banks and building societies have benefitted from rising interest rates, with 14 consecutive rises, supporting net interest income. Fitch Ratings believes this uplift will peak in 2H23 due to a higher pass-through rate and the Monetary Policy Committee voting to maintain the Bank Rate at 5.25% in September. Asset quality has been resilient, but we expect a mild deterioration due to the weak economic outlook, affordability pressures and reducing buffer from saving balances. Conservative Risk Profile:...
