Credit rating agency Standard & Poor’s has lowered HSBC Bermuda’s outlook to “negative” from “stable” because of concerns over potential deterioration of its loan book.S&P affirmed the bank’s credit rating at AA-, which is the highest of any bank in Bermuda, but the negative outlook assesses the potential direction in which a rating will move over the next six months to two years, with “negative” indicating that it may be lowered.The bank has been impacted over the past year by the softening of the property market and slowdown in the economy resulting in people losing their jobs or rental income and struggling to meet their loan obligations.Earlier this month, The Royal Gazette reported that the number of “non-performing loans” on the books of local banks rose by 23.6 percent during the second quarter of this year, according to the Bermuda Monetary Authority latest figures.The ratings agency said: “The negative outlook under current bank criteria is based on our expectation that the bank’s loan performance could weaken further.”On the rating affirmation, S&P noted the bank’s “strong competitive position within the Bermuda banking market, very high capital ratios, good profitability, and a highly conservative liquidity position”.HSBC Bermuda’s CEO Philip Butterfield said: “Over the past year we have witnessed a softening in the Bermuda real estate markets with inventory build up. This has been combined with widespread reduction in business activity in the local economy, leading to loss of income through unemployment or loss of rental income for some customers.“We remain committed to working with our customers to create sustainable solutions and would ask that they contact the bank immediately if changing personal or professional circumstances present future challenges in meeting existing obligations with the bank. We have found that these early discussions with our customers present the best prospects for success.”The bank’s chief financial officer, Michael Schrum, said: “The bank is very pleased to maintain a strong rating in the current economic climate. All our businesses continue to generate high quality revenues and I am confident our capital strength will continue to position the bank as the leading financial services provider in Bermuda.”