... Building Society's (PBS) ratings reflect the society's overall moderate risk profile, improved asset quality, solid capitalisation, and sound funding and liquidity. The ratings are constrained by its limited franchise and the concentration of its business on the UK housing market. Moderate Risk Profile: Our assessment of risk appetite reflects PBS's focus on core residential mortgage loans, as well as its commercial real estate (CRE) lending (10% of loans at end-2016) and the legacy book of second-charge mortgages (Nemo Personal Finance; 5%). CRE and Nemo raise PBS's overall risk profile given the size of these exposures relative to capital. Nonetheless, the risk-return profile has been strong for Nemo and is improving in CRE. Appetite for Commercial Lending: PBS's commercial lending division has been profitable since 2014, after several loss-making years. The society has been reducing the proportion of this business to the overall loan book...
