...Institutional Support Drives Ratings: Ulster Bank Ireland DAC's (UBI) Issuer Default Ratings (IDRs) and Support Rating reflect our opinion that there is a high probability of extraordinary support from its ultimate parent, The Royal Bank of Scotland Group plc (RBSG, BBB+/Stable), if needed. UBI's Long-Term IDR is one notch below RBSG's because UBI is domiciled in Ireland and support may be slightly weaker than it is for RBSG's UK subsidiaries. Weak but Improving Asset Quality: Asset quality has improved significantly since 2014, mainly because the bank has disposed of non-performing loans, taking advantage of improving economic conditions and investor appetite for Irish property. However, impaired loans plus loans in arrears by more than 90 days remain high compared with Irish peers at 17% of gross loans. We expect asset quality to improve further, but gradually and at a slower pace, as the bank works through its remaining impaired loans, which are mostly mortgages. Weak Underlying Profitability:...
