The main driver of this outcome was a projected increase in credit impairments, consistent with recent loss history in Ireland. It is noteworthy that the stress testing assumptions and method were particularly challenging for those banks and countries that had suffered the most significant losses during the crisis and were most reliant on interest income.
Nonetheless it is a timely reminder that much remains to be done to improve the resilience of the domestically focused banks operating in Ireland. Financial strength will remain a focus for the Central Bank together with the ECB in our ongoing engagement with the banks. *** Main Challenges Although the domestically-active banks in Ireland have continued to recover, significant risks remain on the horizon.