Fitch affirms sterling bank’s ‘B-’ rating

Sterling pays shareholders N4.32bn dividend

Fitch Ratings has affirmed Sterling Bank Plc’s Long-Term Issuer Default Rating (IDR) at ‘B-’ with a Stable Outlook, Viability Rating (VR) at ‘b-’ and National Long-Term Rating at ‘BBB+(nga)’.

The rating agency also noted that it has withdrawn Sterling’s Support Rating and Support Rating Floor as they are no longer relevant to the agency’s coverage following the publication of its updated Bank Rating Criteria on 12 November 2021.

In line with our updated criteria, we have assigned Sterling a Government Support Rating (GSR) of ‘ns’.

Read:  Bunmi Adeniba joins coca-cola as marketing director

In the ratings note released at the weekend, Fitch said, Sterling’s IDRs are driven by its standalone creditworthiness, as expressed by its VR of ‘b-’.

“The VR reflects Sterling’s sensitivity to Nigeria’s challenging operating environment, a fairly small franchise, high credit concentrations and weaknesses in the bank’s foreign-currency (FC) funding profile. These are balanced by healthy asset quality metrics and reasonable capitalisation.

“Rising global risks will weaken domestic operating conditions. Inflation is expected to remain stubbornly high, posing downside risks to our real GDP growth forecasts of 3.1 per cent in 2022 and 3.3 per cent in 2023. However, downside risks are somewhat mitigated by strong oil prices, which should also underpin growth in non-oil sectors and banks’ asset quality.

Read:  Four media outfits endorse BON awards


“Sterling operates exclusively in Nigeria under a national banking licence and has fairly small market shares, representing 2.6 per cent of banking system assets at end-2021.”

The rating agency however noted high credit concentrations in the bank, saying, “single-borrower concentration is high, with the 20 largest customer exposures representing 50 per cent of gross loans and 262 per cent of Fitch core capital (FCC) at end-2021. Oil and gas exposure has reduced in recent years but remains high, representing 24 per cent of gross loans and 124 per cent of FCC at end-2021.


Related posts

Fidelity Bank to develop SMEs capacity in non-oil exports sector


NGX resumes September bearish as investors lose N18bn


Olam moves to research on wheat seeds for Nigerian climate


NGO celebrates seven years of service to scholarship scheme project


Naira exchange rates December 2021


New banknotes, beyond their aesthetics


Leave a Comment