Standards & Poors, one of the financial sector’s key credit ratings agencies, has upgraded the ratings of most of the major Irish banks.

Bank of Ireland has recovered its investment grade rating – though at the lowest level – it is the first Irish bank to do since the financial crisis.

This may provide support for the bank’s share price as many institutional investors are only permitted to invest in shares that have such a rating.

AIB, Permanent TSB and KBC also had their ratings increased, though to below investment grade while Ulster Bank’s rating was maintained.

The agency referenced Ireland’s economic growth of up to 4.2 percent this year, the reducing risk of loan default by borrowers and the continued release of loan loss reserved by the banks, as the principal reasons for the upgrades.

"We believe that improvements in banking system profitability and lower risk appetite will prove enduring," the agency said.

It continues, "We believe that the structure of the industry will remain broadly stable, with relatively few players and a primary focus on domestic retail and business banking. As a result, we expect the industry’s existing competitive landscape to remain supportive of a more rational risk-return profile than before the crisis."