Moody’s Affirms Sterling Bank’s B2 Rating with Stable Outlook

Moody’s, an international rating agency, has assigned a B2 stable rating to Sterling Bank Plc based on its resilient deposit funding base and stable local currency liquidity as well as improvements on its IT infrastructure and risk management processes.

The rating agency has also assigned national scale local currency deposit ratings of A1.ng/NG-1and a Counterparty Risk Assessment (CRA) of B1, stable to the bank.

It noted that Sterling Bank’s strengths were balanced against Nigeria’s challenging operating environment, which takes into account the strong growth potential of the system, institutional and structural weaknesses and low foreign currency liquidity buffers.

Others are the vulnerabilities in asset quality on account of high single-name and sector concentration risks and modest capital levels, especially in light of the bank’s high oil and gas and foreign currency loans exposure.

Sterling is a domestic bank with a market share of total assets of around 2.6 percent (N834.2 billion, $2.6 billion, FY2016) which holds a national commercial banking license and its banking services have an emphasis on consumer/ retail banking, trade services, commercial and corporate banking activities.

The bank operates through 180 branches in Nigeria with over 800 ATMs and was established in 2006 following the merger of NAL Bank, Indo-Nigeria, Magnum Trust Bank, NBM and Trust Bank of Africa.

The rating agency remarked that all the long-term ratings assigned to Sterling carry a stable outlook, reflecting its expectation that the bank’s deteriorating asset quality and profitability metrics will likely stabilise in the next 12-18 months.

Moody’s Investors Service, often referred to as Moody’s, is the bond credit rating business of Moody’s Corporation, representing the company’s traditional line of business and its historical name. Moody’s Investors Service provides international financial research on bonds issued by commercial and government entities and, with Standard & Poor’s and Fitch Group, is considered one of the big three credit rating agencies in the world.

These include government, municipal and corporate bonds; managed investments such as money market funds, fixedincome funds and hedge funds; financial institutions including banks and non-bank finance companies; and asset classes in structured finance.

In Moody’s Investors Service’s ratings system, securities are assigned a rating from Aaa to C, with Aaa being the highest quality and C the lowest quality.

Moody’s was founded by John Moody in 1909 to produce manuals of statistics related to stocks and bonds and bond ratings.