Fitch Ratings has revised the outlook on Fidelity Bank Plc's Long-term Issuer Default Rating, IDR, to ‘Positive’ from ‘Stable’, while affirming the rating at 'B-'.
The credit rating agency has also affirmed Fidelity Bank’s National Long-Term Rating at 'A(nga)' with a Stable Outlook.
In a statement, Fitch said that the outlook revision reflects its, “expectations that the bank's capitalisation will strengthen in the near term as a result of core capital issuances, including to meet the new paid-in capital requirement of N500 billion for banks with an international licence effective by end-1Q26.”
According to the statement, “Fidelity's IDRs are driven by its standalone creditworthiness, as expressed by its Viability Rating, VR, of 'b-'. The VR balances the concentration of operations in Nigeria's challenging operating environment, very high credit concentration and high Stage 2 loans against a growing franchise, sound profitability metrics, good capital buffers and reasonable Foreign-Currency, FC, liquidity coverage.
“Fidelity's national ratings are driven by its standalone creditworthiness. They balance a growing franchise and good capital buffers against weaker profitability than higher rated peers.”
The rating agency said that Fidelity is Nigeria's sixth-largest bank, as it accounted for 5% of domestic banking system assets at end-2023, adding that strong balance-sheet growth in recent years has increased bank’s market shares and that it expects these to increase further but remain below those of the five largest banking groups.
On factors that could lead to negative rating action/downgrade, the agency said “A sovereign downgrade could result in a downgrade of Fidelity's VR and Long-Term IDR if Fitch believes that the direct and indirect effects of a sovereign default would be likely to have a sufficiently large effect on capitalisation and foreign-currency liquidity to undermine the bank's viability.
However, this is unlikely considering the Positive Outlook on Nigeria's Long-Term IDRs.”
All rights reserved. This material and other digital content on this website may not be reproduced, published, broadcast, rewritten, or redistributed in whole or in part without the prior express written permission of THE NEWS ACCELERATOR NETWORK.
For advertising inquiries, please contact thenewsacceleratornetwork@gmail.com or 08033599492. For news coverage or press releases, call 08022717838.
Post a Comment