Fitch Ratings has downgraded the credit rating of People’s United Financial but upgraded the Bridgeport lender’s outlook from negative to stable.
Fitch lowered People’s United’s long-term rating of ‘A-‘ to ‘BBB+’ and its short-term credit quality rating from ‘F1’ to ‘F2’.
The downgrade is the result of the bank’s declining capital levels amidst commercial loan growth, and lower profitability compared to its peers.
Fitch said the weaker earnings were primarily due to low interest rates, which have affected industry peers as well.
Webster outlook stable
Fitch’s analysis of People’s United was part of a periodic review of 13 mid-tier regional banks — a group that also includes Waterbury lender Webster Financial Corp.
Buoyed by solid earnings and its recent acquisition of JP Morgan’s health savings account business, Webster Bank and its parent Webster Financial Corp. both have stable outlooks and good credit quality, Fitch said.
Fitch affirmed an issuer default rating of ‘BBB’ to each entity, which indicates a low risk of default and adequate capacity to meet financial commitments. Each also received short-term credit quality ratings of ‘F2,’ which is the second best rating Fitch assigns in that category.
