NIBC Bank N.V.

The stable outlook on NIBC reflects our view that the bank will execute its strategy in line with its recent update, with no change in risk appetite. We also expect that NIBC will maintain robust capital and good asset quality over the next 18-24 months, thanks to the ongoing de-risking strategy and management's expertise. The outlook also reflects our expectation that NIBC's funding profile will remain skewed toward significant, albeit well-diversified, wholesale funding. We could lower the ratings over the next 18-24 months if we observed nonperforming exposures and credit losses were rising faster than we expected. This could result from a greater risk appetite or business concentration. We could also lower the ratings if the bank were unable to

...NIBC's recent business refocusing supports its creditworthiness, but the lack of a well-established franchise in highly competitive core market segments could jeopardize the bank's strategic execution and profitability. NIBC is strategically developing three core activities, namely, mortgage lending, asset-backed financing, and small-ticket lending like leasing. We consider that such development could support more predictable earnings, better asset quality, and be positive in the medium term. Specifically, we expect the bank's return-on-equity to gradually grow above the 8% we calculated at year-end 2022. However, we believe the bank's limited scale and lack of a strong franchise compared to higher-rated domestic peers could limit its competitive advantage in certain core strategic business segments, like the highly competitive domestic mortgage market. We anticipate that NIBC will continue to rely on a solid capital base, while maintaining relatively good asset-quality metrics. Specifically,...

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