New Telegraph

Fitch assigns lender ‘B-’; stable outlook

Fitch Ratings has assigned Ecobank Nigeria Limited (ENG) a Long-Term Issuer Default Rating (IDR) of ‘B-’ with a Stable Outlook, Viability Rating (VR) of ‘b-’ and National Long-Term Rating of ‘BBB (nga)’. In a report, released last Thursday, Fitch noted that Ecobank Nigeria IDRs are driven by its standalone creditworthiness, as expressed by its Viability Rating (VR).

 

The VR reflects the constraint of Nigeria’s challenging operating environment and modest core capital buffers amongst others. This is balanced by company profile strengths as well as a solid funding profile and good foreign-currency liquidity, which is enhanced by prudent liquidity management by the Ecobank group.

 

According to Fitch, “the Stable Outlook on ENG’s Long- Term IDR reflects our view that the bank has sufficient headroom at its current rating to absorb moderate shocks from sustained downside risks to the operating environment, the heightened level of risk in doing banking business in Nigeria and the ensuing risks to its financial performance (particularly asset quality) over the next 12-18 months.

 

The Stable Outlook also reflects our expectations that capitalisation will remain resilient over this period with the bank maintaining adequate buffers over the minimum regulatory requirements.”

 

Fitch Rating reported that the VR benefits from ENG’s company profile strengths of being part of the leading pan- African Ecobank group. ENG is a 100% owned subsidiary of Ecobank Transnational Incorporated (ETI; B-/Stable). ENG is a material subsidiary for ETI, and its largest single entity, contributing to 23% of group assets at end-9M20.

 

ETI continues to implement a turnaround strategy at Ecobank Nigeria, having deleveraged and de-risked the bank in recent years, although it returned to growth in 2020 and plans abovesector- average loan growth in the medium term. Fitch noted that ENG’s management quality is a relative strength, with ETI appointing experienced bankers to Ecobank Nigeria’s senior team.

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