Fitch affirms viability of all Nigerian banks
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.