Finance

Fitch affirms ratings of FBN holdings, first bank

FirstBank changes names of UK, Africa subsidiaries

International rating agency, Fitch Ratings, has affirmed FBN Holdings and its banking subsidiary, First Bank Nigeria’s ratings at “B-” as it said the group’s earnings capacity remains sound.

According to the rating agency, FBNH’s earning capacity remains sound, underpinned by below-sector-average funding costs, highlighting the group’s solid competitive position.

Fitch in the ratings just released, stated that the “B-” rating primarily reflects corporate governance weaknesses highlighted by the Central Bank of Nigeria (CBN) in April 2021, pertaining to long-standing and problematic related-party exposures at FBNH.

Read:  Flour Mills announces 47% increase in revenue to N523bn

“We understand that these issues have not yet fully been resolved by FBNH, which creates uncertainty surrounding further remedial actions that CBN may impose and puts pressure on the ratings. In light of the latter, and given FBNH’s Limited headroom above minimum capital requirements and thin capital buffer to absorb potential shocks, its weak capitalisation also drives the negative outlook.”

Read:  Stock All-Share index sheds 0.36% as market extends bearish trend

While noting that the holding company’s impaired loan ratio had further improved from 28 per cent as at end of 2018 financial year to 7.6 per cent as at the end of the first half of 2021, Fitch said “loan quality remains a weakness compared with peers, although net loans were a low 32 per cent of assets at end-1H21.

“However, as a result of the write-offs, coverage of impaired loans by loan loss allowances fell to 47 per cent (end-2018: 72 per cent), one of the lowest levels among peers.

Read:  Dangote group becomes 2021 most valuable brand

Leadership

Related posts

Zenith Bank shareholders approve N100.47bn dividend payment

NigGal

Appzone launches zone switch in Nigeria

NigGal

POS operators review charges, give reasons

NigGal

Cadbury Nigeria, 14 others to close gender gap

NigGal

Zenith Bank, GTCO lead five others in N801.3bn dividend payout to investors in three years

NigGal

Dollar may hit N700 this week as FX scarcity lingers

NigGal

Leave a Comment