Fitch affirms Long-Term Issuer Default Rating of 6 Nigerian banks

Fitch Ratings has affirmed Long-Term Issuer Default Ratings (IDR) of six Nigerian lenders.

In a recent publication, the global rating agency listed the banks to include: United Bank for Africa (UBA) Plc,  Bank of Industry Limited (BOI), Guaranty Trust Bank Limited (GTB), Access Bank Plc (Access) and FBN Holdings (FBNH) Plc.

According to the agency, United Bank for Africa (UBA) Plc’s Long-Term Issuer Default Rating (IDR) has been affirmed at ‘B’.

UBA’s National Short-Term IDR has also been upgraded to ‘F1+(nga)’ from ‘F1(nga)’, reflecting the bank’s continuing solid funding and liquidity profile, which is a rating strength. The outlook on the bank it stated, is stable.

Also, Fitch Ratings affirmed Nigeria-based Bank of Industry Limited’s (BOI) Long-Term Issuer Default Rating (IDR) at ‘B’ with a stable outlook.

Fitch also upgraded BOI’s National Long-Term Rating to ‘AAA(nga)’ from ‘AA+(nga)’, “reflecting our view of an increased likelihood of support from the Nigerian authorities for the bank’s local currency obligations,” the agency observed.

Similarly, Fitch  affirmed Guaranty Trust Bank Limited’s (GTB) Long-Term Issuer Default Rating (IDR) at ‘B’ and Viability Rating (VR) at ‘b’. The outlook is stable.

The stable outlook reflects Fitch’s view that risks to GTB’s credit profile are captured at the current rating level, with sufficient headroom, under its base case, to absorb the fallout from operating-environment pressures.

The ratings of GTB, Fitch said, are driven by its intrinsic credit-worthiness, as defined by its ‘b’ VR. The VR takes into consideration its business concentration and sensitivity to Nigeria’s volatile operating environment, which is mitigated by solid capitalisation, healthy asset quality, solid through-the-cycle profitability and a deposit-driven funding profile.

Another lender’s Long-Term Issuer Default Rating (IDR) affirmed by the agency is Access Bank Plc at ‘B’ and Viability Rating (VR) at ‘b’. The outlook is stable.

The stable outlook reflects Fitch’s view that risks to Access’s credit profile are captured at the current rating level, with sufficient headroom, “under our base case, to absorb the fallout from operating environment pressures.

“Fitch has also upgraded Access’ Short-term National Rating to ‘F1+(nga)’ reflecting the bank’s solid funding and liquidity profile, which is a rating strength,” it stated.

Also, Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of FBN Holdings Plc (FBNH) and its primary operating subsidiary, First Bank of Nigeria Ltd (FBN), at ‘B-’, adding that the outlooks are negative.

The negative outlooks primarily reflect corporate governance weaknesses highlighted by the Central Bank of Nigeria (CBN) in April 2021, pertaining to long-standing and problematic related-party exposures at FBNH. “We understand that these issues have not yet fully been resolved by FBNH, which creates uncertainty surrounding further remedial actions that CBN may impose and puts pressure on the ratings,” Fitch stated.

It affirmed First City Monument Bank (FCMB) Limited’s Long-Term Issuer Default Rating (IDR) at ‘B-’ with a stable outlook on September 30, 2021.

The National Long-Term Rating has been upgraded to ‘BBB+(nga)’ from ‘BBB(nga)’, reflecting the bank’s increased credit-worthiness relative to that of other issuers in Nigeria.

According to Fitch, the IDRs of FCMB are driven by its intrinsic credit-worthiness, as defined by its ‘b-’ VR. 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 adequate capitalisation and asset quality for the rating, the latter partly reflecting large non-loan assets comprising mainly Nigerian government securities (B/stable), and cash placements.