Fitch affirms Stanbic IBTC Bank’s national rating at ”AAA(nga)”

 

Fitch Ratings has affirmed the National Long and Short-Term Ratings of Stanbic IBTC Holding Company Plc (SIBTCH) and its main operating subsidiary, Stanbic IBTC Bank Plc (SIBTC), at ‘AAA(nga)’ and ‘F1+(nga)’ respectively.

Fitch affirmed Diamond Bank Plc’s Long-Term Issuer Default Rating (IDR) at ‘B-‘, saying the outlook is negative.

Fitch Ratings also affirmed Nigeria-based Wema Bank Plc’s Long-Term Issuer Default Rating (IDR) at ‘B-‘ and National Long-Term Rating at ‘BBB-(nga)’, saying the outlook is stable.

Stanbic IBTC Holding Company Plc National Ratings are based on potential support from its parent, South Africa’s Standard Bank Group Limited (SBG/Group; BB+/Stable) if required. Fitch’s view of institutional support considers SIBTCH’s strategic importance to SBG, high levels of integration between the parent and the subsidiary, as well as SBG’s majority shareholding in SIBTCH (53.07percent through Stanbic Africa Holdings Limited).

Stanbic IBTC Holding Company Plc is the holding company for SBG’s Nigerian operations. Its main operating entity, SIBTC, is a mid-tier commercial bank, which forms 95percent of the holding company’s assets. In Fitch’s view, SBG’s support would extend to both SIBTC and SIBTCH. SIBTC is therefore rated the same as the holding company.

Given Nigeria’s Country Ceiling of ‘B+’, SIBTCH’s and SIBTC’s National Ratings could withstand up to a two-notch downgrade of SBG’s Long-Term Foreign-Currency IDR of ‘BB+’ before they would be affected. Downside risk to the ratings could also stem from a decline in SBG’s willingness or ability to provide support, or from a change in SBG’s stake, resulting in a loss of control.

Fitch noted that a downgrade of Nigeria is unlikely to result in a downgrade of Stanbic IBTC Holding Company Plc / Stanbic IBTC Bank Plc National Ratings.

Fitch said Diamond’s IDRs are driven by the bank’s intrinsic creditworthiness as defined by its Viability Rating (VR). Diamond’s VR considers its vulnerable asset quality. Fitch noted that the bank’s “loan impairment charges are consistently above peers and impaired loans as a percentage of gross loans was 9.6percent at end-9M17, well above the sector average for rated banks, as reported under IFRS. Reported impaired loans are not indicative of a very high level of problem loans. Around 20percent of Diamond’s loan portfolio is considered impaired under local prudential classification rules.

For Wema, Fitch said IDRs are driven by its standalone creditworthiness as defined by its Viability Rating (VR). “The VR is constrained by challenging operating conditions in Nigeria, the bank’s modest franchise (1percent market share), as well as weak earnings and profitability and tight capitalisation. These factors are counterbalanced by Wema’s coherent strategy, strong management team, good impaired loan ratio and low levels of foreign currency (FC) loans,” according to the rating agency.

 

Iheanyi Nwachukwu