... Society's (PBS) ratings reflect strong asset- quality indicators, conservative underw riting standards, capitalisation and leverage commensurate w ith the society's risk profile, and a stable funding and liquidity profile. The ratings also reflect an undiversified business model, PBS's overall small size and modest franchise and slightly w eaker cost efficiency than that of peers. Healthy Asset Quality: Asset quality is healthy and compares w ell w ith that of UK peers, w ith 0.6% of gross loans reported as Stage 3 at end-1H19. Loan performance is supported by benign operating conditions (low interest rates, low unemployment) and a focus on low loan-to-value (LTV) prime ow ner-occupied mortgages. Exposure to inherently higher-risk segments, such as commercial real estate (CRE) and buy-to-let (BTL), is high relative to Fitch-rated peers, although concentrated in low LTVs. Profitability Pressure: Profitability has been supported by cyclically...
