KBRA believes the overall creditworthiness of the UK building society sector remains resilient despite continuing challenges related to Brexit, persistent inflation, elevated interest rates, geopolitical tensions, and global trade disruption stemming from the new US administration’s policies, all of which continue to weigh on the UK economy. Headwinds in the housing market will also present challenges to UK building societies. However, most are well prepared and should weather the storm with sound credit profiles.
Key Takeaways
- KBRA believes the sector can absorb continuing macro pressures. However, building societies remain vulnerable to cost-of-living increases and rising unemployment, as well as a potential housing market downturn, given the institutions’ undiversified business models.
- Forthcoming challenges and risks to UK building societies’ profitability and asset quality are mitigated by their generally sound capitalisation, ample liquidity, and stable funding.…