Fitch Affirms Stanbic IBTC Bank at 'AAA(nga)'
Fitch Ratings-London/Johannesburg-04 December 2009: Fitch Ratings-London/Johannesburg-4 December 2009: Fitch Ratings has today affirmed Stanbic IBTC Bank PLC's (SIBTC) National Long- and Short-term ratings at 'AAA(nga)' and 'F1+(nga)', respectively.
The National ratings are based on the support the bank derives from Standard Bank Group Limited's (SBG) majority ownership. They factor in the level of integration that has developed between SIBTC and SBG, and SBG's written commitment in its 2008 annual report to support its banking subsidiaries. SBG's main operating subsidiary is the Standard Bank of South Africa Limited ('BBB+'/'F2'/Outlook Stable).
Fitch considers that SBG's willingness to support SIBTC is high although its ability to do so is moderate given the transfer and convertibility risks associated with Nigeria's Country Ceiling of 'BB '. During September 2007, SBG merged its Nigerian operations of Stanbic Bank (Nigeria) Limited with IBTC Chartered Bank Plc and acquired a 50.1% stake in the enlarged IBTC. SBG reported that this stake had increased to 50.7% at FYE08. Following the merger, SBG's group risk governance framework has being introduced and since April 2008 the merged bank has been known as SIBTC.
The difficult operating environment caused SIBTC's net earnings for Q309 to decline to NGN3.7bn (Q308: NGN10.6bn) mainly due to a 32% increase in operating expenses and higher impairment charges following the Central Bank of Nigeria's (CBN) special examination. Fitch expects SIBTC's earnings to FYE09 will be significantly lower than FYE08 with the difficult operating environment continuing to negatively impact the bank's profitability into FYE10.
Management advised that SIBTC's gross loans had fallen 20% to Q309 from Q308 mainly as a result of a decrease in margin facilities. Following the completion of the CBN special examination, SIBTC's gross non-performing loans increased NGN20.7bn, up from NGN15.5bn at FYE08. This resulted in SIBTC reporting a NPL ratio of 17.1% at Q309, up from 13.7% at FYE08, and a coverage ratio of 0.74x (FYE08: 0.67x).
Further development of SIBTC's funding franchise saw a further inflow of deposits to Q309. SIBTC reported a tier 1 capital adequacy ratio of 32% at end-Q309 (FYE08: 35.5%). Management expects SIBTC's tier 1 capital ratio to decline in the short- to medium term as it pursues its strategy of expanding the bank's franchise. However, Fitch considers SIBTC to be adequately capitalised.
Established in 1989, SIBTC is a Nigerian universal bank offering corporate and investment banking services, asset management, and private and retail banking services.
In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.
Contacts: Anthony Walker, Denzil de Bie, Johannesburg, + 27 11 380 0900.
Media Relations: Hannah Warrington, London, Tel: +44 (0) 207 417 6298, Email: hannah.warrington@fitchratings.com.
Note to Editors: 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. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(nga)' for National ratings in Nigeria. Specific letter grades are not therefore internationally comparable.
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