Strong capital, with high leverage ratios. Ample liquidity buffers and a stable deposit funding base. Stable franchise, equally split between retail and corporates. Uncertainty associated with capital controls in Iceland. Domestic economy offers few diversification opportunities. Still sizable nonrecurring items boosting profitability. The positive outlook on Icelandic commercial bank Arion Bank hf. reflects Standard&Poor's Ratings Services' view that Arion's stand-alone credit profile (SACP) is likely to develop alongside improvements in the Icelandic economy. We see a positive trend for economic risk in Iceland's banking sector, and would expect to lift the ratings on Arion Bank if we improved our view on the sector. We anticipate that the bank's risk-adjusted capital (RAC) ratio would move toward 11%-12% if it
