Fitch International credit rating agency has affirmed the viability ratings of First bank Nigeria Limited and Guaranty Trust Bank Plc. Fitch affirmed the Viability Ratings (VR) for FirstBank of Nigeria Limited at “B” while it affirmed the GTBank’s Viability Rating (VR) at ‘b+’.
The global rating agency also rated FirstBank’s outlook as stable, thus buttressing the strong outlook on the bank, particularly as its diversified distribution network across African and international geographies make it very resilient to cyclical volatilities in any of its market of operations.
The rating agency explained that the challenging and volatile operating environment in Nigeria and other key rating factors, particularly the banks’ financial profiles, constrain the VRs in the highly speculative ‘b’ range.
It however affirmed that despite slower asset growth and higher loan impairment charges, the long term national outlooks of the banks remain stable and expect them to remain profitable in 2016 due to still strong earnings generation and their unchanged respective creditworthiness relative to each other.
Fitch revised the Outlook on GTbank’s Bank’s Long term Issuer Default Rating (IDR) from Negative to Stable citing the Bank’s continuing strong earnings and stronger-than-expected liquidity as the reasons for the revised outlook. Fitch Ratings also affirmed GTBank plc’s Long-term Issuer Default Rating (IDR) at ‘B+’ with a Stable Outlook and Short-term IDR at ‘B’.
In addition, the agency affirmed the Bank’s Viability Rating (VR) at ‘b+’, Support Rating (SR) at ‘4’ and GTB Finance BV’s senior notes, guaranteed by Guaranty Trust Bank: affirmed at ‘B+’/’RR4′ Fitch revised GTBank’s Support Rating Floor (SRF) to ‘B’ from ‘B+’ as a result of the Sovereign’s weak foreign currency position.
The IDR rating and outlook reflects Fitch’s opinion of the Bank’s relative ability to meet its financial commitments and the Bank’s rating of B+ remains the highest credit rating in the industry. The Viability Rating (VR) which is a component of the IDR measures the Bank’s intrinsic credit quality and capacity to maintain ongoing operations and to avoid failure.
Fitch affirmation of the Bank’s VR shows that despite the tough operating environment, GTBank’s strong and stable financial metrics as indicated by its profitability track record, healthy liquidity state, strong asset quality and capital ratios, have continued to impact positively on the Bank’s VR rating of b+ which remains the highest in the industry.