Fitch Rates Sterling, Two Other Banks Stable Outlook

United States based Fitch Ratings said First City Monument Bank Limited, Sterling Bank Plc and Coronation Merchant Bank Limited’s Long-Term Issuer Default Rating (IDR) has a stable outlook rated ‘B’.

Their National Long-Term Rating was also upgraded to ‘BBB+(nga)’ from ‘BBB(nga)’, reflecting their improved credit worthiness.

The New York firm said in a publication that the rating reflects their increased credit worthiness compared to other Nigerian banks.

The IDR is an assessment of a bank’s relative vulnerability to default on financial obligations which is comparable across industry groups and countries.

FCMB also has a ‘b-‘ Viability Rating (VR) which is driven by its ‘ intrinsic creditworthiness’.

Fitch said the VR reflects the bank’s exposure to Nigeria’s volatile operating environment, a small franchise and high credit concentrations.

“The Stable Outlook reflects Fitch’s view that risks to FCMB’s credit profile are captured by the current rating, with sufficient headroom under our base case to absorb the fallout from operating-environment pressures,” the rating firm said.

For Sterling, the firm said the bank’s IDR rating was driven by its stand alone credit worthiness, as expressed by its Viability Rating (VR) of ‘b-‘.

“The VR reflects the concentration of the bank’s activities within Nigeria’s challenging operating environment, a fairly small franchise, high credit concentrations, and foreign currency (FC) funding and liquidity weaknesses resulting from high depositor concentration.

“This is balanced against adequate asset quality and capitalisation for the bank’s risk profile.

“The Stable Outlook reflects Fitch’s view that risks to Sterling’s credit profile are captured by the current rating, with sufficient headroom under our base case to absorb the fallout from operating-environment pressures,” said Fitch.

For Coronation Merchant the rating firm said its Long- and Short-Term IDRs of CMB are driven by its standalone credit profile as expressed by its VR of ‘b-‘.

“Its VR reflects the bank’s concentration in and sensitivity to Nigerian operating environment risks and is also constrained by the bank’s niche franchise and structural funding and liquidity weaknesses resulting from the absence of a retail deposit license.

“This is balanced by the bank’s sound asset-quality record and adequate capitalisation and performance, which constitute rating strengths,” Fitch added.