Fitch af­firms vi­a­bil­ity of all Nige­rian banks

Daily Trust - - BUSINESS - From Sun­day Michael Ogwu, La­gos

Fitch Rat­ings has af­firmed the Is­suer De­fault Rat­ings (IDRs) of eight Nige­rian com­mer­cial banks and af­firmed the Vi­a­bil­ity Rat­ings (VR) of all the banks.

The out­look on the LongTerm For­eign Cur­rency IDR of one of the banks, Guar­anty Trust Bank (GTB), has been re­vised to stable from neg­a­tive due to con­tin­u­ing strong earn­ings and stronger-than-ex­pected liq­uid­ity.

The rat­ings re­leased late Mon­day, saw the down­grad­ing First Bank of Nige­ria (FBN) and United Bank for Africa’s (UBA) the Long-Term For­eign Cur­rency Is­suer De­fault Rat­ings (IDRs) to ‘B’ from ‘B+’. The out­looks are stable.

Fitch noted that, since the last re­view in Fe­bru­ary 2016, bank as­set qual­ity has con­tin­ued to weaken with av­er­age im­paired loans (NPL) ra­tios of about 6.2% at end-March 2016, although this is skewed by FBN’s high NPL ra­tio of 21.5%.

Im­pair­ments in banks are in­creas­ing in the com­mer­cial, trad­ing and man­u­fac­tur­ing seg­ments, mainly due to for­eign cur­rency de­pre­ci­a­tion and scarcity.

“NPLs in the oil sec­tor are also ris­ing, but most of the larger prob­lem loans are be­ing re­struc­tured. FBN’s high NPL ra­tio is mainly due to the bank’s ex­po­sure to the down­stream oil sec­tor.

“Sus­tained low oil prices and con­tin­u­ing pro­duc­tion dis­rup­tions in the Niger Delta could cause in­dus­try NPL ra­tios to rise more dra­mat­i­cally.” The agency added.

Fitch cur­rent rat­ing ac­tions on the bank fol­low the down­grade of Nige­ria’s sov­er­eign rat­ings on June 23, to ‘B+’; Out­look Stable.

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