Irish Nationwide has been assigned a financial strength rating by a ratings agency that is equal to its sixth-highest grade.

Moody's said in a credit opinion note that the building society's "Baa1" subordinate rating took into account Irish Nationwide's "good earnings capacity and high efficiency as it continues to operate with a low cost base despite a relatively large branch network".

The agency said the rating also recognised the society's "high dependence on net interest income and high involvement in commercial real estate lending activities, as well as its growing dependence on wholesale funding resources".

Moody's said Nationwide's outlook was "stable", but a challenge was the "high concentration risks in commercial real estate loans".

The agency expected the society's dependence on market funding to continue to increase, though the slowdown in the growth rate of property markets in Ireland and the UK "may mitigate this".

The higher cost of funding, caused by market turmoil, may affect Nationwide, but Moody's noted its "solid customer deposit base and the long-term nature of its funding".