Moody’s assigns Ba3 ratings to Nigeria’s Bank of Industry

Moody’s Investors Service has assigned first-time ratings to Nigeria’s Bank of Industry, a development finance institution: Ba3/Not Prime Local and Foreign Currency Issuer Ratings.

These ratings are underpinned by a b2 standalone credit profile and two notches of uplift due to our government support assumptions. The outlook on all the ratings is stable.

Bank of Industry’s b2 standalone profile reflects its robust capital buffers, with equity to assets ratio of 30 percent as of September 2015; a stable liability structure made up of long-term funding at concessional rates; and the tangible improvements to the bank’s governance and risk positioning in recent years, according to Moody’s.

These strengths are balanced against Nigeria’s currently challenging operating environment; and Moody’s projection that asset quality will be increasingly pressured given the rapid loan growth strategy that the bank is pursuing, particularly in the micro, small and medium-sized enterprises (MSMEs) segment, which may expose the bank to riskier assets.

The Ba3 issuer rating incorporates two notches of rating uplift from the b2 standalone profile, reflecting assumption of a high probability of support by the Nigerian government in case of need.

This assumption is underpinned by Bank of Industry’s 95 percent Ministry of Finance and 5 percent Central Bank of Nigeria (CBN) ownership, as well as its policy role.

Bank of Industry is the leading development finance institution in Nigeria, with assets of over N701 billion ($3.5 billion) and is mandated to support the establishment of new domestic businesses and the expansion or rehabilitation of existing domestic businesses.