Sterling Bank, GTBank, Five others get Moody’s National Scale Ratings

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A Moody's sign on the 7 World Trade Center tower is photographed in New York August 2, 2011. Behind all too many of market moves in government debt of late has been a report from one of the major credit ratings agencies. Standard & Poor's is the biggest and arguably the most influential, fast followed by Moody's Investor Service and then their smaller rival, Fitch Ratings. In national capitals, they are alternately villified by politicians or held out as just arbiters for denouncing government profligacy. REUTERS/Mike Segar (UNITED STATES - Tags: BUSINESS POLITICS)

NOVEMBER 7, 2016 – Global rating agency Moody’s Investors Services has assigned national scale ratings (NSRs) to Sterling Bank Plc and six other Nigerian banks.

This rating action, according to a statement from Moody’s, follows the publication of new national scale rating maps for Nigeria, Kenya and Morocco, which provide a measure of relative creditworthiness within a single country; and are derived from global scale ratings using country-specific maps.

The agency assigned A1.ng/NG-1 national scale local currency deposit ratings to Sterling Bank. These ratings were underpinned by a standalone baseline credit assessment (BCA) of b3 and one notch of government support uplift, which results in a global scale long-term issuer and deposit rating of B2.

Moody’s also assigned A2.ng/NG-1 national scale foreign currency deposit ratings to Sterling Bank.

According to Moody’s, “the A1.ng rating is the second highest of three national scale ratings categories corresponding to the bank’s local currency deposit global scale ratings.

Other banks that national scale local currency deposit ratings were assigned to included Zenith Bank Plc, Guaranty Trust Bank Plc (GTBank), Access Bank Plc, United Bank for Africa Plc (UBA), First Bank of Nigeria Limited and the Bank of Industry (BOI).

“Sterling Bank’s national scale ratings capture the bank’s solid asset quality metrics (reported non-performing loans ratio of 2.8 per cent as at end-June 2016 versus 11.7 per cent for the banking system), provision coverage and solid deposit funding base”.

These strengths are balanced against low foreign currency liquidity buffers, which underpin the lower national scale foreign currency deposit rating compared with its local currency deposit national scale rating; vulnerabilities in asset quality; and relatively modest capital levels.

Commenting on the rating outcome, Executive Director, Finance and Strategy Mr. Abubakar Suleiman said the ratings affirm the bank’s business model and resilience amidst challenging operating conditions. He further noted that the bank’s solid asset quality metrics reflected a robust risk management framework put in place by its management.

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