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Tag: Fitch

  • Fitch, Agusto affirm BoI’s positive outlook

    Rating agencies, Fitch Ratings and Agusto &Co have revised the Bank of Industry’s (Bol) rating.

    While Agusto  moved BoI ratings from Aa- to Aa, Fitch retained the bank’s Long-Term issuer Default Ratings (IDR) of AA+ (nga).

    According to Agusto&Co, the Aa assigned rating reflects the development finance institution’s very good financial condition and strong capacity to repay obligations on a timely basis.

    Indeed, Agusto noted that the rating recognises BOI’s good capitalisation levels, acceptable asset quality, good liquidity profile and low cost funding base during the review period of 2018.

    On its part, Fitch noted that BoI’s ratings are sensitive to any change in the state’s ability to support the bank, as indicated by a downgrade of Nigeria’s sovereign rating, adding that the bank’s strong capital ratios are prudent given the DFI’s sensitivity to the volatile economic environment.

    Though the rating agencies affirmed the susceptibility of the bank’s fragility in the macroeconomic environment, particularly as it targets risky economic sectors; they noted that safety measures such as bank guarantees, treasury bills, and Federal Government bonds provided by large corporates mitigate risks to an extent.

    With the bank’s non-performing loan (NPL) ratio standing at 4.9 per cent at end of first half 2018, the rating agencies noted that there are expectations that the volume of delinquent loans to moderate slightly in the near term given some remedial actions taken on the affected impaired loans.

    On the bank’s outlook, Agusto said: “While the Bank’s funding base has grown significantly, its loan portfolio has not shown that level of growth. This is as a result of major challenges the Bank faces, such as insufficient capacity to reach micro, small and medium scale business across the country and the dearth of bankable projects.

    “To extend its reach, BOI is partnering with commercial and microfinance banks which have the branch network and staff strength to penetrate the market nationwide.

    However, insufficient bankable projects remain a drag on the Bank’s projected performance. This is primarily due to the weak macroeconomic and operating environment which deters businesses from thriving.

    “Going forward, we expect the Bank’s performance to be upheld by the support of its two largest shareholders which drives the lending business, funding from multilateral finance organisations and an experienced management team overseeing the daily operations of the Bank”.

     

     

  • Fitch affirms Nigeria at ‘B+’, outlook negative

    Fitch Ratings yesterday  affirmed Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B+’ with a negative outlook.

    The ‘B+’ rating reflects Nigeria’s position as Africa’s largest economy and most populous country, its net external creditor position.

    The rating also shows its well-developed domestic debt markets, balanced against a high level of hydrocarbon dependence, low levels of domestic revenue mobilisation and Gross Domestic Product (GDP) per capita, and low rankings on governance and business environment indicators.

    Fitch said the negative outlook reflects uncertainty about the sustainability of the economic growth momentum as the impact of earlier shocks eases and progress on addressing high interest service ratios.

    Fitch forecasts Nigeria’s GDP growth to accelerate to 2.4 per cent in 2018, as the country continues to climb out of the oil price shock recession that characterised 2016 and first quarter of 2017. Growth turned positive in second quarter of 2017, and the recovery of oil production, to 2.1 million barrels (including condensates) per day (mbpd) by fourth quarter of 2017 , boosted oil sector output.

    Additionally, greater forex availability provided a lift to the non-oil export sectors, particularly agriculture. Fitch expects that these trends will continue, but notes that tight monetary conditions will continue to weigh on Nigeria’s growth outlook. Fitch forecasts 2019 growth to rise slightly to three per cent, compared with 4.8 per cent for the five years prior to 2016.

    At 11.6 per cent, the five-year average inflation is much higher than the ‘B’ category median (4.9 per cent). At its most recent meeting in April 2018, the central bank held its monetary policy rate at 14 per cent, where it has been since July 2016. The need to support the naira and lingering inflation pressures mean that the Central Bank of Nigeria (CBN) will ease monetary policy only gradually.

    The naira has fluctuated close to N360 per dollar on the Investors & Exporters (I&E) window since its introduction in April 2017. Given most forex activity is now handled on the I&E window, this implies a devaluation by 45 per cent since the start of forex regime adjustments in June 2016.

    Together with higher oil prices and production, this has contributed to the convergence between the parallel market and the I&E rate. However, the forex market remains segmented and the continued use of exchange controls inhibit greater foreign-currency liquidity and capital inflows. In Fitch’s view, there is unlikely to be any further substantial change by the CBN to the existing forex rate regime before the 2019 elections.

     

     

  • Fitch: FirstBank’s strong retail franchise reflects market confidence

    Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDR) of FBN Holdings Plc (FBNH) and FirstBank of Nigeria Ltd (FBN). The rating agency says the structure of FBNH’s funding base is credit positive. FBNH’s funding costs are lower than peers, reflecting FBN’s strong retail franchise while local currency liquidity ratios are consistently well above minimum regulatory limits. The bank’s strong earning potential and improving asset quality affirm its Viability Ratings (VR) at ‘b-’ and Long-Term National Ratings at ‘BB+(nga)’, writes COLLINS NWEZE.

    From its creditworthiness, large capital and customer bases, as well as strong retail franchise, FBN Holdings has so many things going for it. Hence, when Fitch Ratings affirmed the Long-Term Issuer Default Ratings (IDR) of FBN Holdings Plc (FBNH) and FirstBank of Nigeria Ltd (FBN), the step was applauded by industry watchers.

    FirstBank’s global ratings remained strong, and that explained why, despite the challenges faced by many Nigerian banks in accessing international capital markets because of refinancing risks, foreign banks lent to FBN throughout 2016 when several Nigerian banks experienced tight foreign currency liquidity positions. This, Fitch said, is an indication of market confidence in FBN Holdings, which it viewed positively.

    The report, signed by Fitch Senior Director/Primary Analyst Janine Dow, Committee Chairperson Eric Dupont and Secondary Analyst Andrew Parkinson, indicated that the key rating drivers showed that FBN Holdings is the non-operating holding company which owns FBN or FirstBank. FBN Holdings ratings are aligned with those of FBN, its main operating subsidiary.

    The FBN’s ratings are driven by its stand-alone creditworthiness hence, reducing the group’s dependence on contributions from FBN is a medium-term target.

    According to Fitch, FBN generates around 90 per cent of the group’s revenues, but the objective is to increase contributions from other subsidiaries over time, while FBN represents around 95 per cent of consolidated group assets.

    “FBN is one of Nigeria’s largest banks, with shares of 14 per cent and 17 per cent of banking sector loans and deposits, respectively. In the past, the group’s business model was reliant on large, often oil-related, corporate lending. Risk-control deficiencies, especially asset quality, are being addressed by new management,” Fitch said.

    For instance, gross loans represent slightly below half of FBNH’s balance sheet with around 40 per cent of gross loans extended to the oil and gas sectors, many of which have been restructured. It said the restructuring efforts made to align debt servicing schedules with projected cash flows appear reasonable and the performance of restructured loans appears to be holding up well.

    “Loan loss reserve coverage reached 52 per cent of impaired loans at end-September 2017, low compared with the average for large Nigerian banks peers (around 90 per cent). Unreserved impaired loans represented 36 per cent of Fitch Core Capital (FCC).FBNH’s margins are in line with peer averages and cost/income ratios are reasonable, considering the bank’s large branch network. FBN’s ability to generate revenues at pre-impairment operating level is strong,” it said.

    According to Fitch Ratings, the structure of FBNH’s funding base is credit positive. “Stable customer deposits, largely held at FBN and demonstrating considerable stability, represent around two-thirds of FBNH’s total deposits. FBNH’s funding costs are lower than peers, reflecting FBN’s strong retail franchise. Local currency liquidity ratios are consistently well above minimum regulatory limits,” it said.

    Foreign currency-denominated borrowings, which represent around five per cent of total funding, mainly comprise two Eurobond issues, maturing in August 2020 and July 2021.

    It said the Negative Outlook reflects pressure on capital arising from a still large amount of unreserved impaired loans. FBNH’s and FBN’s National Ratings reflect their creditworthiness relative to the country’s best credit and relative to peers operating in Nigeria.

    Fitch believes that sovereign support to Nigerian banks cannot be relied on given Nigeria’s (B+/Negative) weak ability to provide support, particularly in foreign currency. In addition, there are no clear messages from the authorities regarding their willingness to support the banking system.

    Fitch said FBN’s and FBNH’s ratings are primarily sensitive to a change in the level of loan loss reserve cover.

    “At present, unreserved impaired loans weigh on capital adequacy and this has a high influence on the ratings. Once asset quality trends demonstrate sustained improvement, loan loss reserves cover a larger proportion of impaired loans, and assuming the operating environment does not deteriorate, the Outlook on the ratings would no longer be Negative and upgrades could be envisaged. If key weaknesses are addressed, FBNH and FBN could achieve multi-notch upgrades because their ratings are well below their natural levels considering FBN’s size and position within Nigeria’s banking sector,” Fitch said.

    A downgrade could result from further weakness in already limited capital buffers, which could threaten FBN’s viability. Given the positive trends in asset quality improvement and capital retention, this is not our base case.

     

    Performance indicators/earnings

    FirstBank has for years relied on technology, innovative product development and quality customer services to define its leadership position in the market.

    The bank has not only deepened its commitment to technology and quality services, but has also provided new products and services that give its customers value for their money. Fortunately, these investments are paying off speedily as seen in its rising profitability.

    The new focus and approach to a technology-driven institution as a key to driving business is in line with the appointment of a Chief Information Officer (CIO) to oversee and drive the development of a full digital and transaction banking offering, through the digitising of the bank’s customer offerings by automating key processes. The bank is also strengthening technology infrastructure to drive efficiency across all business areas.

    FBN Holdings Plc posted combined N870.6 billion gross earnings in 30 months. It recorded gross earnings of N581.8 billion for the full year ended December 31, 2016 and N288 billion for the half-year ended June 30, this year. These results are pointers that its customers, investors and other stakeholders should be confident of better years ahead.

    The bank said its new product development and deployment of efficient technology helped it to achieve these milestones. For the full year, the FBN Holdings Plc net interest income stood at N304.4 billion, up 14.8 per cent from N265.2 billion while non-interest income of N165.5 billion, up 68.9 from N97.9 billion in the previous year’s figures.

    Also, operating income was at N469.9 billion, up 29.4 per cent year-on-year from N363.1 billion while impairment charge for credit losses was at N226 billion as against N118.8 billion in 2015. Operating expenses as at N220.9 billion, down 0.8 per cent compared to N222.7 billion in 2015 while profit before tax of N22.9 billion, up 6.3 per cent as against N21.6 billion in 2015. The firm’s profit after tax stood at N17.1 billion, up 10.3 per cent when compared to N15.5 billion in 2015.

    For the half-year, FBN Holdings posted N288.8 billion gross earnings in its unaudited half-year results for the period ended June 30, this year. The gross earnings represent 7.8 per cent year-on-year rise as against N267.9 billion recorded same period of last year. The bank’s net-interest income of N164.1 billion was up 30.2 per cent year-on-year against N126.1 billion same period of last year.

    FirstBank Managing Director/CEO, Adesola Adeduntan, said: “The Commercial Banking group proved its overall earning capacity with a 6.9 per cent year-on-year increase in gross earnings to N260.9 billion mainly driven by our core business operations with stronger margins.

    “At the same time, we intensified our credit resolution efforts resulting in the improvement of the asset quality position with the reduction in non-performing loans 25.7 per cent in the last quarter to 21.8 per cent at the Commercial Banking group. We are optimistic about further improvement in asset quality and the general quality of the loan book. In the next half of the year, we will be driving enhanced revenue generation, efficiencies and profitability towards an overall improved performance, while remaining focused on sustaining the portfolio management efforts.

     

  • Fitch: Banks’ problems’ll persist

    Fitch: Banks’ problems’ll persist

    Fitch Ratings yesterday said Nigerian banks will continue to face challenges this year, following an extremely difficult 2016.

    It explained that banks faced multiple threats from the operating environment in 2016, including Nigeria sliding into recession, the economy continuing to suffer from low oil prices and severe shortages of foreign currency.

    It said lenders have struggled with declining operating profitability (excluding translation gains), sluggish credit growth, fast asset quality deterioration, tight foreign currency liquidity and weakening capitalisation, putting increasing pressure on their credit profiles.

    “The outlook for the rest of 2017 is not much brighter. We believe that the banks will continue to face extremely tight foreign currency liquidity despite the authorities’ best efforts to normalise the foreign-exchange (FX) interbank market and improve the supply of dollars,” it said.

    It said deliveries under the Central Bank of Nigeria’s (CBN) Forex forward transactions since June last year have helped the banks access dollars and reduce a large backlog of overdue trade finance obligations to international correspondent banks.

    It said that severity of the foreign currency liquidity issues, refinancing risk remains at the top of our perceived risks for the sector, especially as some banks have large Eurobond maturities in 2017/2018.

    “Fast asset quality deterioration is in line with our expectations given the macro challenges and the continuing issues in the oil-sector. Oil-related impaired loans are high and this excludes large volumes of restructured loans. Other industry sectors contributing to bad loans include general commerce and trading, which have been affected by both the naira depreciation and foreign currency shortages,” it said.

    It said slower economic growth and a lower risk appetite from banks will continue to translate into subdued credit growth and weak core earnings generation in 2017.

    “Loan growth averaged 25 per cent in September last year, but this was due to the currency translation effect post devaluation as about half of sector loans are in foreign currency. Loan growth was negligible in constant currency terms. The banks’ 2016 profitability was underpinned by large translation gains booked on net long foreign currency positions following the naira devaluation,” it said.

  • Fitch: forex market changes may ease scarcity

    Fitch: forex market changes may ease scarcity

    Measures announced on 20 February by the Central Bank of Nigeria (CBN) may ease some of the severe foreign currency liquidity pressure faced by the country’s banks, Fitch Ratings says.

    The most important aspect of the CBN’s announcement is a plan to normalise the foreign exchange (forex) interbank market, the group said. The intention is to clear the backlog of overdue foreign currency obligations owed by banks to international creditors.

    According to Fitch, “these are primarily trade finance obligations owed to correspondent banks. In addition, the CBN will no longer have a say in how banks on-lend the foreign currency they access from it. Banks previously had to demonstrate that funds were being directed to priority sectors of the economy. The CBN says providing foreign currency to the manufacturing sector is still a priority, but with restrictions eased, larger banks with greater access to foreign currency will be free to lend to the smaller banks whose access to international funding is restricted.”

    The CBN has also stated its intention to increase intervention in the forex interbank market to increase supply. The CBN has also reduced the maximum waiting times for banks to take delivery of foreign currency through its forward sales contracts to 60 days from 180. The first of these forwards was announced yesterday for $500million, with banks reported to have bought around $371million in one-month and two-month forwards. This should help banks make more timely payments to creditors, speeding up the flow of currency to importers and helping the economy.

    The CBN’s initiatives are an important boost for banks as access to foreign currency liquidity is tight and banks have struggled to meet their foreign currency obligations. Nigeria is highly dependent on imports and Nigerian banks have long provided trade finance facilities to importers.

    Currency scarcity and exchange rate weakness have made it harder for importers reliant on naira-denominated cash flows to service US dollar-denominated trade finance lines, forcing some banks to restructure their obligations with international correspondent banks last year.

  • Fitch revises Nigeria’s outlook to negative

    Fitch Ratings yesterday revised the Outlook on Nigeria’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to negative from stable and affirmed the IDRs at ‘B+’.

    The issue ratings on Nigeria’s senior unsecured foreign currency bonds have also been affirmed at ‘B+’.

    The country ceiling has been affirmed at ‘B+’ and the short-term foreign and local currency IDRs have been affirmed at ‘B’.

    The revision of the outlook reflects tight forex liquidity and low oil production that contributed to the country’s first recession since 1994. The economy contracted through the first three quarters of last year and Fitch estimates gross domestic product (GDP) growth of -1.5 per cent last year as a whole.

    Fitch said: “We expect a limited economic recovery in 2017, with growth of 1.5 per cent, well below the 2011-15 annual growth average of 4.8 per cent. The non-oil economy will continue to be constrained by tight foreign exchange liquidity. Inflationary pressures are high with year on year CPI inflation increased to 18.5 per cent in December. Access to foreign exchange will remain severely restricted until the Central Bank of Nigeria (CBN) can establish the credibility of the Interbank Foreign Exchange Market (IFEM) and bring down the spread between the official rate and the parallel market rates.

    “The spot rate for the naira has settled at a range of N305-N315 per USD in the official market, while the Bureau de Change (BDC) rate depreciated to as low as N490 per USD in November 2016. In an effort to work with the CBN to help the parallel market rates converge with the official, BDC operators subsequently adopted a reference rate of N400 per USD. However, dollars continue to sell on the black market at rates of well above N400. The authorities have communicated a commitment to the current official exchange rate range, but the availability of hard currency at those rates is severely constrained.

    “Trading volumes in both the spot and derivative markets increased following the June changes to the official foreign exchange market, but remain low, at of $8.4billion in December, compared to $24billion in December 2014. Gross general government debt increased to an estimated 17per cent of GDP at end-2016, from 13 per cent at end-2015, although it remains well below the ‘B’ median of 56 per cent and is a support to the rating. However, the country’s low revenues pose a risk to debt sustainability. Gross general government debt stands at 281per cent of revenues in 2016, above the ‘B’ median of 230per cent.

    “Nigeria’s government debt is 77per cent denominated in local currency, which makes it less susceptible to exchange rate risk, but the share of foreign currency debt is increasing. Additionally, the government faces contingent liabilities from approximately $5.1billion in debt owed by the Nigeria National Petroleum Corporation (NNPC) to its joint venture partners.”

    Fitch forecasts that Nigeria’s general government fiscal deficit will remain broadly stable this year at 3.9per cent of GDP, just below the ‘B’ category median of 4.2per cent.

    It said the country is likely to experience a recovery in oil revenues, but will continue to struggle with raising non-oil revenues. Total revenues will rise to just 7.4 per cent of GDP, up from 6.2 per cent in 2016, but still below the 12.4per cent of GDP experienced in 2011-15.

    Import and excise duties have experienced a boost from the depreciation of the naira, but corporate taxes and  value added tax (VAT) will continue to underperform, owing to issues with implementation and compliance. On the expenditure side, growing interest costs will increase current spending.

    Fitch forecasts the cost of debt servicing in 2017 will reach 1.4per cent of GDP, up from an average of 1.1per cent over the previous five years.

    The banking sector has experienced worsening asset quality as a result of the weakening economy, problems in the oil industry, and exchange rate pressures on borrowers to service their loans.

    The CBN reported that industry non-performing loans (NPLs) grew to 11.7per cent of gross loans at end-June 2016, up from 5.3per cent at end-December 2015.

  • Fitch affirms BoI’s sovereign rating stable

    Fitch affirms BoI’s sovereign rating stable

    Fitch Ratings has re-affirmed the national ratings of the Bank of Industry (BoI) as stable in outlook.

    Fitch had last year downgraded Nigeria’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘B+’ from ‘BB-’, as a result of which it is now equalised.

    The agency further noted that BoI’s ratings were retained because its operations were solely in local currency.

    According to Fitch, the IDRs of BoI, a state-owned policy bank, are driven by its SRF of ‘B+’ and reflect a limited probability of sovereign support.

    “The IDRs of BoI, a state-owned policy bank, are driven by its SRF of ‘B+’ and reflect a limited probability of sovereign support. They consider its 99.9 per cent state ownership, policy role and strategic importance to Nigeria’s economic and industrial development.

    “They also consider the authorities’ stronger ability to support BoI than commercial banks, as BoI’s operations are solely in local currency. BoI’s Long-Term IDR has a stable outlook, reflecting the stable outlook on the sovereign rating.

    “BoI’s IDRs, SR and SRF are sensitive to a weakening in Nigeria’s ability to support the bank, which would be indicated by a downgrade of Nigeria’s sovereign rating,” it said.

    A statement from Fitch added that the ratings could also be downgraded if its view of the state’s willingness to support the bank changes adversely, for example if there is a material change in the government ownership or a change in the bank’s policy role. This is not Fitch’s base case.

    BoI, however, maintained that it remained very virile and better repositioned to push the frontier of the nation’s industrial sector through aggressive business financing.

    On the rating of other banks, Fitch noted that it is monitoring the banks’ ability to meet maturing foreign-currency obligations. “In the current difficult market conditions, Fitch believes the banks are facing challenges to refinance existing obligations and/or obtain foreign exchange from the Central Bank of Nigeria (CBN) to meet maturing obligations.

  • Fitch affirms BoI’s sovereign rating

    Fitch Ratings has affirmed the national rating of the Bank of Industry (BoI) as well as seven other banks.

    According to Fitch, the rating actions followed its downgrade of Nigeria’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘B+’ from ‘BB-’, as a result of which it is now equalised with the Long-Term Foreign Currency IDR.

    A statement from Fitch explained that the new rating was driven by change in Fitch’s sovereign rating criteria. “Following the sovereign criteria change and rating action, Fitch has recalibrated the national rating scale for Nigeria. As a result the national ratings for these banks are affirmed as there is no change in their relative creditworthiness.

    “The national ratings of BOI are driven by potential sovereign support reflecting its 99.9 per cent state ownership, its policy role and the bank’s strategic importance to Nigeria’s economic and industrial development”, the statement read.

    BoI however, maintained that it remains very virile and better repositioned to push the frontier of the nation’s industrial sector through aggressive business financing.

  • Fitch rates Diamond ‘BBB’+, Bol gets AA+

    Fitch rates Diamond ‘BBB’+, Bol gets AA+

    Diamond Bank’s strong fundamentals have been reaffirmed by the global credit ratings and research agency, Fitch Ratings.

    In the recently released 2016 Ratings Review of Nigerian Banks, Flitch affirmed a ‘B’ Rating, with Stable Outlook for Diamond Bank’s Short-term and Long-term Foreign Currency Issuer Default Ratings (IDR).

    The bank’s national long-term rating was also affirmed at ‘BBB+ (nga)’; while the national short-term rating was affirmed at ‘F2 (nga)’. Viability rating was affirmed at ‘b’; support rating affirmed at ‘4’; support rating floor: affirmed at ‘B’; while the senior unsecured notes rating was affirmed at ‘B’/’RR4′.

    The ‘B’ IDR rating indicates that Diamond Bank has the capacity to meet financial commitments, subject to the country’s business and economic environment; while the ‘BBB+ (nga)’ national ratings denote a “moderate default risk relative to other issuers or obligations in the same country”. Further, the ‘F2 (nga)’ national short-term rating “indicates a good capacity for timely payment of financial commitments relative to other issuers or obligations in the same country”. These ratings were premised partly on Fitch’s downgrade of Nigeria’s sovereign ratings (to ‘B+’) on 23 June 2016, in addition to the bank’s strong capital, operational and liquidity positions.

    Reacting to the report, the Bank’s spokesperson, Ayona Trimnell said: “These ratings affirmed the precision of our corporate strategy in deploying new technologies and digital applications to drive financial inclusion, convenient banking, enhanced customer friendly services and our overall retail banking approach.”

    Fitch noted that the strong regulatory capital ratios of the Bank have helped offset the one-off impact from the devaluation arising from Nigeria’s new foreign exchange regime. Nevertheless, the buffer between Nigerian banks’ capital ratios and the regulatory minimum is reducing.

    The Bank of Industry (BoI) has issued a clarification about the report regarding its performance rating, insisting that the nation’s foremost development finance institution still maintains AA+ credit rating by Fitch.

    It stated that rating posted on the Fitch website, which was misconstrued in some quarters  as indicating a slip in the performance of the bank, was merely a sovereign rating for the country in general and not for a stand alone institution.

    The bank maintained that the DFI is very virile and better repositioned to push the frontier of the nation’s industrial sector through aggressive business financing.

    According to the bank, the Fitch’s rating of AA+, and Moody’s BA3 remain the best among the nation’s indigenous financial institutions.

  • Fitch, Augusto rate GTBank, UBA high on strong earnings, asset quality

    Fitch International, one of the foremost global rating agencies, has again adjudged Guaranty Trust Bank (GTBank) Plc and United Bank for Africa (UBA) Plc, and upgraded its ratings for the two Nigerian leading banks, citing the banks’ strong earnings and asset quality.

    In its latest Rating Report, Fitch indicated that GTBank remains one of the top two rated banks in Nigeria. Fitch revised the outlook on the GTBank’s long-term issuer default rating (IDR) from negative to stable, citing the bank’s continuing strong earnings, and stronger-than-expected liquidity as the reasons for the revised outlook.

    Fitch Ratings also affirmed GTBank’s long-term issuer default rating (IDR) at ‘B+’ with a stable outlook and short-term IDR at ‘B’. In addition, the agency affirmed the bank’s viability rating (VR) at ‘b+’, support rating (SR) at ‘4’ and GTB Finance BV’s senior notes, guaranteed by GTBank was affirmed at ‘B+’/’RR4′. Fitch revised the bank’s support rating floor (SRF) to ‘B’ from ‘B+’ as a result of the sovereign’s weak foreign currency position.

    The IDR rating and outlook reflects Fitch’s opinion of the bank’s relative ability to meet its financial commitments and GTBank’s rating of B+ remains the highest credit rating in the industry. The viability rating (VR), which is a component of the IDR measures the bank’s intrinsic credit quality and capacity to maintain ongoing operations and to avoid failure.

    The report showed that despite the tough operating environment, GTBank remained strong and stable as indicated by its profitability track record, healthy liquidity state, strong asset quality and capital ratios.

    Also, Fitch affirmed UBA’s viability rating at “B” as the pan-African banking group continues to sustain its benchmark asset quality and strong profitability amidst industry and macroeconomic challenges. UBA is one of the few banks with strong risk management framework, which has helped keep non-performing loans ratio at a moderate level of 1.74 per cent as at the end of March 2016, as against industry average of more than six per cent, as reported by Fitch.

    Fitch also upgraded UBA’s outlook to stable from negative, thus reinforcing the strong outlook on the bank, especially as its diversified network across eighteen other African countries makes it relatively immune against the potential cyclical volatilities in any of its country of operations.

    The upgrade came as Nigeria’s foremost local rating agency, Agusto & Co,  upgraded UBA’s rating from “A+” to “Aa-”, with a stable outlook, citing the bank’s improved capitalisation, good liquidity and large pool of stable deposits, strong domestic presence supported by the bank’s extensive branch network and growing alternative banking channels.