Fitch Ratings and Moody's on March 31 downgraded certain ratings of South Africa's biggest banks, citing an expected negative impact from the spread of the novel coronavirus.
Fitch downgraded the long-term local- and foreign-currency issuer default ratings of Absa Group Ltd. and unit Absa Bank Ltd., Nedbank Group Ltd. and unit Nedbank Ltd., Standard Bank Group Ltd. and unit Standard Bank of South Africa Ltd., Investec Ltd. and unit Investec Bank Ltd. and FirstRand Bank Ltd. to BB from BB+, with negative outlooks.
The rating agency also downgraded the banks' national long-term ratings to AA-(zaf) from AA(zaf) and changed the outlook to negative from stable, as well as their viability ratings to "bb" from "bb+". The banks' short-term foreign-currency issuer default ratings and short-term national ratings were affirmed at B and F1+(zaf), respectively.
Separately, Moody's downgraded the long-term local- and foreign-currency deposit ratings of Standard Bank of South Africa, FirstRand Bank, Absa Bank, Nedbank and Investec Bank to Ba1 from Baa3, with the outlooks remaining negative, following a similar action on the sovereign.
The rating agency also lowered the long-term issuer ratings of Absa Group and Standard Bank Group to Ba2 from Ba1, as well as the long-term local-currency deposit rating of FirstRand unit First National Bank of Namibia Ltd. to Ba2 from Ba1 and revised the outlook on the Namibian entity to stable from negative.
Moody's said the ratings actions were driven by the increasingly difficult operating environment for South African banks and the weakening credit profile of the government.