Fitch affirms 10 Nigerian banks at ‘B’, outlook stable

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FITCH, the global rating agency, has affirmed Long-Term Issuer Default Ratings (IDR) of 10 Nigerian banks at ‘B’ with a stable outlook.

In a fresh report obtained from its website, the global rating agency listed the 10 lenders to include: Zenith Bank Plc, Access Bank Plc, Guaranty Trust Holding Company Plc (GTCO), Ecobank Transnational Incorporated, Stanbic IBTC, United Bank for Africa, First City Monument Bank, Sterling Bank, Wema Bank and Fidelity Bank.

The agency said it has withdrawn Support Rating and Support Rating Floor as they are no longer relevant to Fitch’s coverage following the publication of its updated Bank Rating Criteria on November 12, 2021.

In line with the updated criteria, “We have assigned a Government Support Rating (GSR) of ‘no support’’ (ns),” it stated.

For Zenith Bank, Fitch also affirmed National Long-Term Rating at ‘AA-(nga)’ and Viability Rating (VR) at ‘b’.

It noted that Zenith’s Long-Term IDR is driven by its standalone creditworthiness, as expressed by its VR, among other reasons.

According to Fitch, Zenith is Nigeria’s second-largest banking group, representing 15 per cent of domestic banking system assets at end-2021.

It also noted that the lender has moderate credit concentrations; improving asset quality; strong profitability; strong capitalisation and stable funding profile.

Fitch Ratings, while affirming Access Bank’s Long-Term Issuer Default Rating (IDR) Viability Rating (VR) at ‘b’ and National Long-Term Rating at ‘A+(nga)’, said the bank’s Long-Term IDR is driven by its standalone creditworthiness, as expressed by its VR. The VR factors in a leading franchise, healthy loan quality and strong revenue diversification, profitability and liquidity coverage.

The agency also observed that the lender has significant credit concentrations; improved loan quality and strong profitability.

Similarly, Fitch Ratings, while affirming Nigeria-based Guaranty Trust Holding Company Plc (GTCO) at ‘B’ with stable outlooks and National Long-Term Ratings at ‘AA(nga)’, stated that the Long-Term IDRs of GTCO and GTB are driven by their standalone creditworthiness, as expressed by their Viability Ratings (VRs) of ‘b’.

“The National Ratings are driven by GTCO’s and GTB’s standalone strengths. They are at the higher end of the scale given GTCO’s and GTB’s strong business and financial profiles.

“VRs equalised with Group VR: GTCO is the bank holding company (holdco) for GTB. The VRs of GTCO and GTB are the same as the group VR,” it stated.

Fitch Ratings further affirmed Ecobank Transnational Incorporated’s (ETI) Long-Term Issuer Default Rating (IDR) at ‘B-’ with a stable outlook and Viability Rating (VR) at ‘b-’.

ETI’s Long-Term IDR was driven by its standalone creditworthiness, as expressed by its VR of ‘b-’. ETI is the non-operating bank holding company (BHC) of Ecobank Group. Its VR is notched down once from the ‘group VR’ of ‘b’ due to high common equity double leverage (153 per cent at end-2021).

The agency upgraded Fidelity Bank Plc’s Long-Term Issuer Default Rating (IDR) to ‘B’ from ‘B-’. The outlook is stable. The upgrade reflects Fidelity’s improving business profile and resilient financial metrics.

Fitch also upgraded Fidelity’s National Long-Term Rating to ‘A(nga)’ from ‘BBB+(nga)’, reflecting the bank’s increased creditworthiness relative to other issuers in Nigeria. A full list of rating actions is below.

According to the agency, the VR reflects healthy asset quality, good business profile and reasonable capitalisation and liquidity.

These are balanced against high sensitivity to Nigeria’s challenging operating environment as well as higher credit concentration as a percentage of equity and weaker profitability than larger domestic-rated peers.

Stanbic IBTC Holdings PLC (Stanbic IBTC) and its 99.9 per cent owned subsidiary, Stanbic IBTC Bank PLC, were affirmed at ‘AAA(nga).’

The National Ratings of Stanbic IBTC and Stanbic IBTC Bank are based on potential support from their ultimate parent, South Africa’s Standard Bank Group Limited (SBG; BB-/Stable), which owns 67.5 per cent of Stanbic IBTC.

The ratings reflect SBG’s willingness and ability to support Stanbic IBTC and Stanbic IBTC Bank, if required.

First City Monument Bank (FCMB) Limited’s Long-Term Issuer Default Rating (IDR) was also affirmed at ‘B-’ with a stable outlook and Viability Rating (VR) at ‘b- .’

Fitch has also upgraded the bank’s National Short-term Rating to ‘F1(nga)’ from ‘F2(nga)’ due to the bank’s improving funding and liquidity.

In line with the updated criteria, “We have assigned FCMB a Government Support Rating (GSR) of ‘no support’ ‘(ns),” it stated.

The VR reflects FCMB’s exposure to Nigeria’s volatile operating environment, a small franchise and high credit concentrations.

This is balanced by the bank’s improving funding and liquidity, moderate capitalisation and adequate asset quality for the rating. According to the agency, the latter partly reflects its fairly small loan book (45 per cent of total assets) and large non-loan assets comprising mainly Nigerian government securities (B/stable).

Fitch Ratings affirmed United Bank for Africa (UBA) Plc’s Long-Term Issuer Default Rating (IDR) at ‘B’ with a stable outlook as well as its Viability Rating (VR) at ‘b’ and National Long-Term Rating at ‘A+(nga)’.

UBA’s IDRs are driven by its standalone creditworthiness, as reflected in its ‘b’ VR. The VR considers UBA’s exposure to the Nigerian volatile operating environment, but also the bank’s healthy profitability and adequate capitalisation, which provide reasonable capacity to absorb losses from an economic downturn.

Wema Bank Plc’s Long-Term Issuer Default Rating (IDR) was affirmed at ‘B-’ with a Stable Outlook, Viability Rating (VR) at ‘b-’ and National Long-Term Rating at ‘BBB(nga)’.

Wema’s IDRs are driven by its standalone creditworthiness, as expressed by its VR. The VR reflects Wema’s small franchise, high credit concentrations, aggressive loan and balance-sheet growth and funding weaknesses.

It also reflects good asset quality and our expectation of a significant improvement in capitalisation and leverage, due to a material rights issue due to be concluded by end-2022.

For Sterling Bank Plc, Fitch Ratings affirmed its Long-Term Issuer Default Rating (IDR) at ‘B-’ with a Stable Outlook, Viability Rating (VR) at ‘b-’ and National Long-Term Rating at ‘BBB+(nga)’.

Sterling’s IDRs are driven by its standalone creditworthiness, as expressed by its VR of ‘b-’. The VR reflects Sterling’s sensitivity to Nigeria’s challenging operating environment, a fairly small franchise, high credit concentrations and weaknesses in the bank’s foreign-currency (FC) funding profile. These are balanced by healthy asset quality metrics and reasonable capitalisation the rating agency noted.