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Moody's changes outlook on 9 Nigerian banks after sovereign action

Moody's on Dec. 6 acted on nine Nigerian banks, a few days after the agency changed the outlook on the sovereign to negative from stable, citing the country's "extremely narrow" revenue base and persistently sluggish economic growth.

The rating agency changed the outlook on the long-term deposit and issuer ratings of Access Bank PLC, Zenith Bank PLC, FBN Holdings PLC unit First Bank of Nigeria Ltd., United Bank for Africa PLC, Guaranty Trust Bank PLC, Union Bank of Nigeria PLC, Fidelity Bank PLC, First City Monument Bank Ltd. and Sterling Bank PLC to negative from stable.

At the same time, the agency affirmed the banks' B3/B2 long-term foreign- and local-currency bank deposit ratings as well as their B2/Not Prime long- and short-term foreign- and local-currency issuer ratings.

Moody's also affirmed Union Bank of Nigeria's B2/Not Prime long- and short-term foreign- and local-currency counterparty risk ratings, A2.ng/NG-1 national scale long- and short-term foreign- and local-currency counterparty risk ratings, A3.ng/A2.ng national scale long-term foreign- and local-currency bank deposit ratings, NG-2/NG-1 national scale short-term foreign- and local-currency bank deposit ratings, B2(cr)/Not Prime(cr) long- and short-term counterparty risk assessments, and "b3" baseline and adjusted baseline credit assessments.

The agency affirmed Zenith Bank's long- and short-term foreign- and local-currency counterparty risk ratings at B1/Not Prime, national scale long- and short-term foreign- and local-currency counterparty risk ratings at Aaa.ng/NG-1, national scale long-term foreign- and local-currency bank deposit ratings at A3.ng/Aa3.ng, national scale short-term foreign- and local-currency bank deposit ratings at NG-2/NG-1, long- and short-term counterparty risk assessments at B1(cr)/Not Prime(cr), baseline and adjusted baseline credit assessments at "b2", and senior unsecured debt rating at B2.

The affirmations reflect the banks' financial profiles, which have shown resiliency against the difficult operating environment in the country, the agency said. Meanwhile, the negative outlook takes into account the lenders' exposure to sovereign debt securities and loans — averaging at 244% of their capital bases as of June.