By Dipo Olowookere
Access Bank’s baseline credit assessment (BCA) has been downgraded by Moodys’ Investors Service to b3 from b2, with its long-term CRRs dropped to B2 from B1, its long-term CRA lowered to B2(cr) from B1(cr) and the national scale CRRs dropped to Aa3.ng from Aa1.ng.
In a release by the rating agency, it was explained that the decision to lower the Nigerian lender’s rating was because of the possible weakening of the bank’s credit profile following the merger with Diamond Bank, despite the immediate improvement to Access Bank’ funding structure and long-term profitability.
It said following the merger, Access Bank’s capital and asset risk metrics will deteriorate given Diamond Bank’s weaker credit profile (though much smaller than Access Bank, Diamond Bank had a BCA of caa3 before the merger was completed).
“Following the BCA downgrade to b3, we now incorporate 1 notch of rating uplift on Access Bank’s BCA to align its local currency deposit ratings of B2 with that of Nigeria’s issuer rating,” Moody’s said.
Meanwhile, Moody’s has confirmed Access Bank’s long-term local currency deposit rating of B2, long-term foreign currency deposit rating of B3, long-term issuer ratings of B2, local currency senior unsecured rating of B2, local currency national scale deposit ratings of A1.ng/NG-1, foreign currency national scale deposit ratings of A3.ng/NG-2 and national scale senior unsecured rating of A1.ng.
Furthermore, Moody’s has affirmed the financial institution’s short-term bank deposit ratings, issuer ratings and counterparty risk ratings (CRR) at Not-prime and affirmed the short-term counterparty risk assessment (CRA) at Not-prime(cr).
The outlook on the bank’s long-term deposit ratings, long-term issuer ratings and senior unsecured rating was changed to stable from ratings under review.
It was stated that the confirmation of Access Bank’s long term deposit ratings with a stable outlook reflects Moody’s view that the deterioration in Access Bank’s standalone credit profile, as a result of the merger, is balanced against our assumption of a high likelihood of Access being supported by the government of Nigeria (B2, stable), if needed.
