S&P Global Ratings on Sept. 22 took various ratingsactions on nine Nigerian lenders and one holding company, following thedowngrade of thecountry's ratings on Sept. 16.
S&P downgraded the long-term counterparty credit ratingsto B from B+ of Access BankPlc, Guaranty TrustBank Plc, StandardBank Group Ltd. unit Stanbic IBTC Bank Plc, and The rating agencyalso lowered the long-term counterparty credit ratings of and to B-from B. The outlook on the long-term ratings of Ecobank Nigeria remainednegative, while the outlook on the long-term ratings of the other six Nigerianbanks was revised to stable from negative.
S&P affirmed the B-/C long- and short-term counterpartycredit ratings of First Bank ofNigeria Ltd. and its non-operating holding company FBN HoldingsPLC, with negative outlooks. The agency removed the ratings from CreditWatchnegative, where they were placed on June 22. S&P also noted that the B- long-termcounterparty credit rating of Diamond Bank Plc remained on CreditWatch negative.
The downgrade of the ratings reflects the agency's view thateconomic risk in the Nigerian banking system has increased due to the weakeconomic environment in the country, on the back of low oil prices, arestrictive foreign exchange regime, and delayed fiscal stimulus. S&Pbelieves these factors will impact the banks' financial performance, weaken theirasset quality, and increase credit losses.
The negative outlook on EcobankNigeria is based on the bank's concentrated dollar funding mix and pressure onthe capital adequacy ratio, which is just above the regulatory minimum. Thestable outlook on Access Bank, Guaranty Trust Bank, Stanbic IBTC Bank, ZenithBank, Fidelity Bank and First City Monument Bank reflect that on the sovereignand a number of other factors, including the agency's expectation of supportfrom the country and expectation that the banks' business and financialprofiles will remain stable in the next 12 months.
The affirmation and removal from CreditWatch negative of theratings of First Bank of Nigeria, a unit of First Bank Nigeria Holdings Plc, and FBN Holdingsreflects S&P's view that the immediate pressure on the bank's regulatorycapital ratio has partially decreased. The negative outlook on FBN Holdingsreflects that on First Bank of Nigeria.
Diamond Bank's long-term rating remaining on CreditWatchnegative reflects S&P's view that the immediate pressure on the bank'scapital adequacy and foreign-currency liquidity remains high in light of the bank's significant deteriorationin asset quality indicators and high foreign-currency lending and fundingconcentration. The agency expects to resolve the CreditWatch within the next 90days.
S&P Global Ratings and S&P Global MarketIntelligence are owned by S&P Global Inc.