A global rating and research company, Fitch ratings, yesterday, released the revised outlook on the long term foreign currency issuer default ratings (IDRs) on top banks in Nigeria with First Bank of Nigeria Ltd (FBN), and Guaranty Trust Bank Plc (GTB) rated to negative from stable.
The research company also upgraded Access Bank’s long term national rating to “A” from “A-” with a stable outlook and affirmed the long term IDRs of the bank.
Fitch affirmed the long term IDRs of 11 Nigerian banks and institutions.
The other banks are Zenith Bank Plc, Access Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, Union Bank Plc, First City Monument Bank Limited (FCMB), and Wema Bank Plc. Fitch has also affirmed the National Ratings of Stanbic IBTC Bank Plc and Stanbic IBTC Holdings Plc. The rating is coming at a time when Nigerian banks are operating in increasingly challenging and volatile conditions.
The collapse of the oil price has led to a faltering gross domestic product growth, a significantly weaker naira, and a scarcity of foreign currency. Coupled with an uncertain policy response, and external factors, these are, to varying degrees, taking a toll on the banks’ risk profiles. Fitch believes that banks will continue to face multiple threats in the course of 2016.
The agency’s view of the weakening ability to provide support is based on the premise that apart from pressures on the sovereign’s foreign currency balance sheet, the size of potential support for the sector may be large should problems occur, which would be widespread, rather than surface in a limited number of banks.
The outlook on GTB’s foreign currency long term IDR is also revised to negative and considers both the decreasing financial flexibility of the sovereign and expectation of downside pressure on its standalone creditworthiness (expressed in a viability rating (VR) of ‘b+’).