S&P, one of the world’s largest credit ratings firms, said it views Ireland’s economic risk as “high” following the property collapse, even though it remains clearly on track for a sustained recovery.

The company estimates Brexit will lower Ireland’s economic growth by between 0.3 per cent and 0.7 per cent next year and in 2018, “only dampening, not derailing the strong domestic momentum,” S&P said in a Banking Industry Country Risk Assessment on Ireland, published on Monday.

“Today, we are seeing clearer evidence that the Irish domestic economy is on the path to sustained recovery from its deep contraction, and that property prices are on an upward trend,” it said, adding that this will provide a favourable backdrop for the country’s banks, who have all seen bad loan losses fall since 2014.

S&P sees Irish gross domestic product falling from 4.6 per cent this year to 3.2 per cent in 2017 and 3 per cent in 2018.

Separately, Fitch has turned more positive on European banks than at any stage since the financial crisis, judging by the amount of ratings upgrades it carried out in the first half of the year.

However, the global bank ratings trend was negative during the six months, it said.

The London-based ratings firm changed 65 bank ratings globally in the period, making it one of the most volatile six-month period in recent years. While its ratings outlooks deteriorated globally over the course of the period, this was driven by emerging markets banks. Almost a third of such banks have a negative outlook it said.

European banks accounted for almost four fifths of 29 bank upgrades carried out by Fitch in the first half, driven by Swedish and Dutch banks, as Brazilian and Saudi Arabian lenders bore the brunt of downgrades as a result of “weakening operating environments” in the respective markets.

Four Italian banks were downgraded as a result of weaker funding and deteriorating asset quality in the sector.