Banking Briefs
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STANDARD & Poor’s, S&P, has upgraded Ecobank Nigeria’s outlook to stable, with a B+/B ratings. The ratings agency explained that the rating assigned to Ecobank Nigeria reflected the profitability and asset quality of its parent, Ecobank Group, adding that the Nigerian unit would likely remain core to the wider group’s performance.
Ecobank Nigeria had reduced its non-performing loans from six percent in 2013 to 4.7 percent in 2014 (the Group went from 6.2 percent to 4.4 percent in the same period). S&P added: “We anticipate that the group’s asset quality should remain broadly stable in 2015, reflecting its diversification across countries and better risk-management practices at the group and affiliate levels,” adding that it expects NPLs to average around five per cent through to 2018.
“In our view, Ecobank Nigeria benefits from the wider group’s scale and franchise in corporate and retail segments across Africa, which should help ensure business growth and revenue stability, despite the difficult Nigerian economy. We consider the group’s business stability to be strong, owing to geographic diversification that supports growth in key markets where it operates among the top-tier banks.”
Its position in Nigeria is underpinned by a wide customer franchise, which S&P noted should enable the bank to maximise its cost of funds and compete adequately with top-tier banks to underwrite business with good-quality names and margins.
Ecobank Group more than doubled its core earnings in 2014 after Nedbank entered as a shareholder, recording a $338 million profit compared with $96 million in 2013. Ecobank Group’s earnings have proved resilient in 2015, despite increasing headwinds in key markets. The group recorded $306 million in net profit for the nine months ended 30 September, 2015, compared with $322 million during the same period last year.
S&P added that in its view, Ecobank Nigeria has “high” systemic importance in Nigeria, and the government is classified as “supportive” toward the country’s banking sector. However, it does not include any uplift arising from government support in the ratings on Ecobank Nigeria due to the level of the sovereign ratings.
— Nov 23, 2015 @ 01:00 GMT
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