Fitch Ratings, one of the world’s foremost
rating agencies, has assigned First Bank of Nigeria Plc, the
international Long-term and Short-term ratings of 'B+' and 'B'
respectively. In addition, Fitch also affirmed the Bank’s National
Long-term and Short term ratings at ‘A+(nga)’ and ‘F1(nga)’,
respectively. This is coming on the heels of the National Long-term
and Short-term ratings of AA and A+ assigned the Bank by Global
Credit Rating Company Limited, one of the Securities and Exchange
Commission’s licensed rating agencies.
International
Credit ratings are usually reflective of an entity’s relative risk
through an expected normal economic cycle. The rating of Nigerian
banks is, thus, affected by the country’s risk rating. Fitch has, so
far, rated two banks internationally in Nigeria, and the two banks
are assigned the same rating, a notch below the sovereign rating
assigned Nigeria.
Both Fitch & GCR accorded FirstBank
the highest rating in the National Short-term category.
The international rating reflects
FirstBank’s improved financial performance and asset quality
indicators, taking into consideration the country’s difficult
operating environment and strong credit growth. According to Fitch,
during FY06, FirstBank's “net earnings before exceptional items
increased 8% year-on-year to NGN18.1 billion, and strong
improvements in financial performance were reported for half year
2006 with recurring net earnings growing by 64.5 % in comparison
with the same period in the prior year”.
The rating agency also affirmed that
“asset quality indicators have improved, with the non-performing
loans (NPL) ratio reducing to 8.9 % from 24.2 % at FYE 05”. In the
opinion of Fitch “interest rate risk is considered low in light of
the Bank’s ability to re-price interest sensitive assets and
liabilities rapidly, and FX exposures are managed within limits”.
Fitch's National ratings provide a
relative measure of creditworthiness for rated entities in countries
with relatively low international sovereign ratings and where there
is demand for such ratings.
Global Credit Ratings on its part indicated
that its rating of FirstBank is based on the Bank’s leading position
in the financial services industry. The agency stated that
concentration risk is relatively low both in terms of deposits and
advances, with both books well diversified.
Overall, FirstBank remains a leader and a
major private sector participant in the country’s economic
re-engineering.
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