Banking
S&P Affirms First Bank ‘B-/B’ Ratings, Revises Outlook to Stable
By Dipo Olowookere
One of the leading rating agencies in the world, S&P Global Ratings, has revised its outlook on First Bank of Nigeria to stable from negative.
In a statement issued on Wednesday, S&P also revealed that it has affirmed its ‘B-/B’ long- and short-term counterparty credit ratings on top Nigerian lender.
In addition, the rating firm said “we have raised our long-term national scale rating on First Bank to ‘ngBB+’ from ‘ngBB’, while we have affirmed our short-term national scale rating at ‘ngB’.”
“Furthermore, we took the same rating actions on FirstBank’s non-operating holding company (NOHC), FBN Holdings PLC (FBNH),” S&P said.
Explaining the reason for its action, the agency said the rating actions reflect its view that First Bank’s regulatory capital has improved and the risk of breaching regulatory requirements has thus diminished.
In addition, the bank’s funding and liquidity remain a credit strength. Although asset quality remains a weakness, it believes this was stabilizing mainly due to the steadying of the oil price and new management’s efforts.
“We expect First Bank will continue to display weaker asset quality metrics and lower profitability than other rated top-tier banks in Nigeria in 2017 due to continuing high credit costs. That said, we believe that the bank’s new leadership team will address the legacy asset quality issues and institute more prudent risk management measures,” the rating company stated.
According to S&P, cost of risk jumped to 10.4% at year-end 2016 from 5.7% at year-end 2015, and nonperforming loans (NPLs) increased to 24.4% for the same period compared with 18.1% the prior year.
The performance of the bank’s portfolio stems from high concentration and foreign currency loans (51% of total loans in 2016), particularly the oil and gas-related exposures.
This performance and the huge impairments have prompted the bank to recruit a new Chief Risk Officer and launch a review of its risk management process to improve loans approvals, risk monitoring, and collection.
The bank is also in the process of de-risking its loan portfolio by converting some of its vulnerable foreign currency exposures to local currency.
“In our opinion, cost of risk will remain high and above the sector average, but decline to 5.3% over the next 12-18 months, while we think NPLs will drop below 20%. At year-end 2016, the bank restructured 5% of its portfolio, with the oil and gas sector accounting for 70% of the total.
“We expect First Bank to continue to restructure some loans, particularly in the downstream oil, manufacturing, and general commerce sectors in 2017.
“We anticipate that our risk-adjusted capital (RAC) ratio for the bank will decline slightly below 5% in the next 12-18 months. This will result from the bank’s risk asset growth moderately outpacing internal capital generation, based on our assumption of a 20% devaluation of the Nigerian naira (NGN) in 2017 and high credit costs,” the statement said.
On Dec. 31, 2016, FirstBank’s CAR improved to 17.8% from 15.4% on June 30, 2016, following a write back of a capital charge of NGN29 billion ($95 million) for exceeding the related party single obligor limit and an increase in retained earnings.
First Bank raised U.S. dollar funding in 2013 and 2014, which underpins its long dollar position at year-end 2016. The bank’s U.S. dollar-denominated subordinated debt provides a natural hedge to its capital position in the scenario of naira depreciation.
Positively, S&P said it views the bank as well-positioned in Nigeria’s competitive banking sector, thanks to its large retail footprint, low cost of funding, and stable deposit base. On Dec. 31, 2016, First Bank recorded a stable funding ratio of 125%, supported by a high proportion (66%) of deposit funding.
The bank’s foreign currency maturity profile displayed positive gaps at year-end 2016. Net broad liquid assets covered 54% of short-term deposits, comparing well with peers.
However, similar to other banks operating in Nigeria, First Bank’s deposit base is somewhat confidence sensitive, due to its contractually short-term nature.
The ratings on the bank reflect the overall creditworthiness of the First Bank group, whose group credit profile (GCP) it assess at ‘b-‘. The bank is the core component of the group, which is one of the largest in the Nigerian financial services industry, with a significant retail franchise, providing it with a leading deposit franchise and good naira liquidity.
S&P said despite the bank’s high systemic importance, the ratings on First Bank reflect its assessment of the bank’s core group status to the First Bank group and its GCP of ‘b-‘.
“We classify the likelihood of support from the Nigerian government to systemically important banks as uncertain and, as such, we do not factor into the ratings any uplift above the bank’s stand-alone credit profile (SACP).
“Our ratings on First Bank’s holding company FBNH are at the same level as the ratings on First Bank, reflecting the absence of debt at the holding company level. Under our criteria, we generally notch down from the GCP to reflect the structural subordination of the NOHC and its exposure to potential regulatory intervention.
“Nevertheless, in FBNH’s case, we take into account the absence of debt at the holding company level and believe that the risk of the NOHC defaulting is not commensurate with the ‘CCC’ rating category,” the agency said.
S&P said further that the stable outlook on First Bank reflects its view that the bank will maintain its CAR above the minimum requirement of 15% over the next 12 months, despite expectations that risk-weighted asset growth will moderately outpace internal capital generation. It also reflects our view that asset quality will continue to stabilize, although still at weak levels, while the bank will maintain its above average funding and adequate liquidity over the next 12 months.
However, the rating agency warned that, “We could lower the ratings on First Bank if we saw a sharp deterioration of capitalization due to higher risk weights (caused by a devaluation of the Naira) or weaker asset quality due to higher credit losses than anticipated.
“A positive rating action on First Bank would depend on the bank substantially improving its asset quality indicators, while maintaining its capitalization, business position, and funding and liquidity at levels commensurate with a higher rating.”
By Modupe Gbadeyanka
A platform to enable cross-border intra-Africa payments for individuals, merchants, and traders in Nigeria and Ghana is being designed by Onafriq Nigeria Payments Limited in partnership with the Pan-African Payment and Settlement System (PAPSS).
The platform, currently in its pilot stage, is the first wallet-based outbound payments scheme, which is fully in Naira and instant, without relying on hard currency conversion.
The parties are working together with banks and mobile money operators in the West Africa nations.
The Central Bank of Nigeria (CBN) has already approved this initiative, which will benefit small and medium enterprises (SMEs), the real engine of intra-African trade, as they will now have access to a faster, cheaper way to reach customers and suppliers across the border.
By reducing barriers to cross-border trade, the new service will allow these businesses to grow their addressable markets and activity. From December 1, this service will be fully operational for a 6-month period.
Through the partnership with PAPSS, Onafriq, which is a CBN licensed payment service provider, is supporting the operationalization of the Africa Continental Free Trade Area (AfCFTA) mandate. The mandate itself is driving tariff-free trade for the 54 member states of AfCFTA. Within the partnership itself, Onafriq provides the mobile money rails, with an ecosystem consisting of over 1 billion mobile wallets.
Meanwhile, PAPSS brings a network of over 160 commercial banks, representing an ecosystem of more than 400 million bank accounts across its 19 African countries of operation. The two partners are essentially seamlessly connecting two worlds: mobile money and banking. As a consequence, intra-African trade transactions will take place more easily and opportunities will be created.
Currently, Africa is made up of bank and mobile-led markets, with siloes often inhibiting transactions between these economies. However, this partnership will remove these boundaries. With over one billion mobile wallets and 500 million bank wallets across Africa, this partnership will allow for cross-border collaboration at scale.
This partnership builds on Onafriq and PAPSS’ existing partnership for payments into Ghana, announced earlier this year.
“Our work with PAPSS shows what collaboration at scale can unlock—seamless, secure connections between banking systems and mobile money ecosystems. This is how we open bi-directional trade corridors, reduce costs for businesses, and give African enterprises the rails they need to trade with confidence in their own currencies. The vision is continental, but it starts with practical steps like this one,” the Managing Director for Anglophone West Africa, Mxolisi Msutwana, said.
The Chief Information Officer for PAPSS, Ositadimma Ugwu, added, “Too often, African businesses and individuals see borders as roadblocks instead of opportunities. With this step, we’re challenging that mindset, giving Nigerians the ability to send value next door with the same ease as sending a text message. Our vision is simple: make Africa’s borders invisible to payments. This pilot makes that a reality, moving us closer to a continent where payments don’t pause at the border.”
By Adedapo Adesanya
Mrs Ifeyinwa Osime has been appointed as the chairman of the board of Access Bank Plc, following the retirement of Mr Paul Usoro on January 29, according to a statement to the Nigerian Exchange (NGX) Limited.
Mrs Osime, an accomplished legal practitioner, joined Access Bank’s board in November 2019 as an independent non-executive director and had chaired the Board Human Resources and Sustainability Committee and the Governance, Nomination, and Remuneration Committee.
This role made her contribute significantly to bank’s corporate governance, leadership development, and sustainability initiatives.
In addition to her role at Access Bank, Mrs Osime is a Director at Ebudo Trust Limited and a Partner at McPherson Legal Practitioners, where she advises on corporate and commercial matters and contributes to strategic leadership.
She is also a member of the Nigerian Bar Association, Women Corporate Directors, Nigeria Chapter, and Chartered Institute of Directors Nigeria, where she serves on the Executive Committee of the Women Sectorial Group.
Beyond her professional responsibilities, Mrs Osime is committed to mentoring youths and is actively involved in the Autism and Developmental Delays Support Community, reflecting her dedication to inclusion and social impact.
Speaking on her appointment, the chairman of Access Holdings, Mr Aigboje Aig-lmoukhuede, said: “Mrs Osime is a principled and experienced leader with a deep understanding of the Bank’s strategy and values.
“She has demonstrated strong commitment to the Bank’s vision and mission, and I am confident that, under her leadership, the Bank will continue to advance its strategic objectives of delivering sustainable value to shareholders and other stakeholders in the pursuit of its vision to become the world’s most respected African Bank.”
He also congratulated Mr Usoro on the completion of his tenure and for his exemplary leadership, dedication and significant contribution to the Group, saying he remains a valued member of the Access Bank family.
By Adedapo Adesanya
The African Energy Bank (AEB), a pan-African financial institution established to mobilise capital for the continent’s energy development and strengthen regional energy value chains, will begin operations in June 2026.
This came as Nigeria officially handed over the headquarters of bank at a ceremony held on the sidelines of the ongoing Nigeria International Energy Summit (NIES).
The president of the African Petroleum Producers’ Organisation (APPO) and Côte d’Ivoire’s Minister of Mines, Petroleum and Energy, Mr Mamadou Colibaly, praised Nigeria for its leadership in bringing the initiative to fruition, as he disclosed the bank was expected to commence operations in four months’ time.
“We are committed to launching this bank no later than June. I sincerely thank our partners for providing the headquarters and office that make this take-off possible. The African Energy Bank represents Africa’s commitment to finance, develop, and secure its own energy future by Africans, for Africans,” he said.
The African Energy Bank is a joint initiative of APPO member states and the African Export-Import Bank (Afreximbank), established to mobilise domestic and regional capital for Africa’s energy infrastructure, reduce dependence on external financing, and align energy investments with the continent’s long-term development and industrialisation agenda.
While performing the handover, Nigeria’s Minister of State for Petroleum Resources (Oil), Mr Heineken Lokpobiri, said the country had fulfilled all its responsibilities as host nation.
“Nigeria has met every obligation as host. The headquarters is ready, strategically located, and fully equipped, and we are prepared for immediate take-off.”
The ceremony highlighted a growing consensus among African leaders on the need for the continent to take greater ownership of its vast natural resources.
Through tailored financial instruments, the bank is expected to support projects across the energy value chain, including exploration, refining, renewable energy integration, and local content development, with a focus on job creation and economic value addition.
The African Energy Bank has been touted as not just another financial institution, but a strategic pillar in Africa’s quest for economic independence and long-term energy security
The African Energy Bank is a pan-African financial institution jointly promoted by APPO member states and Afreximbank to provide tailored financing solutions for energy projects across the continent, strengthen regional energy markets, and support sustainable development through improved access to capital.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism9 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn