Access Bank’s ratings soar

LAGOS — Three rating agencies which include Fitch, Standard and Poors (S&P) and Nigeria’s Agusto & Co have upgraded Access Bank Plc ratings to a new high, while four other top Nigerian banks maintained stable outlook.
The improved ratings, according to the agencies, were attributed to the Banks’ improved market position, strong capitalization, and strong liquidity profile; enhanced distribution network and expanded client base.
Specifically, Fitch, a UK-based rating agency, upgraded the bank’s long-term Issuer Default Rating (IDR) to ‘B’ from ‘B-’ while the bank’s national long-term rating was upgraded to ‘A-(nga)’ from ‘BBB-(nga)’; and outlook upgraded to stable from its positive status. Fitch upgrade of Access Bank is an incredible three notches up.
In the same vein, S&P (Standard and Poors), one of the world’s most reputable rating agencies, upgraded its long-term Nigerian national-scale rating to ‘ngA’ from ‘ngA-’ with its outlook raised from ‘negative’ to ‘stable’ while Agusto & Co, Nigeria’s leading rating agency, upgraded its ‘BBB’ rating of the Bank to ‘A-’; still maintaining its ‘stable’ rating of the bank’s outlook.
This development lays credence to the timeliness of the recent banking reform which has undoubtedly strengthened the Nigerian banking landscape. Outside the subsidiaries of foreign banks present in the Nigerian market which carry the ratings of their parent banks, the ratings of the five largest banks in Nigeria— FirstBank, Zenith, GTBank, Access Bank and United Bank for Africa—are not materially different from one another as they all maintain ‘stable outlook’ in their ratings. This could be taken to mean a tacit classification of the nation’s banking industry with these five occupying Tier 1 position; riding on their financial strength, market capitalization, branch network, customer base, quality of their risk management framework and governance structure.
According to opinions expressed on Access Bank by one of the rating agencies, “Access Bank’s funding has been strengthened by an enlarged branch network following consolidation, which has availed the Bank a vast pool of low-cost deposit.
“In the year under review, local currency deposits grew by 114 per cent to N871 billion. Deposits adequately funded the loan book and Access Bank’s liquidity ratio stood at 74 per cent as at December 31, 2011, well above the regulatory minimum of 30 per cent.”
Meanwhile, Moody’s Global Banking Managing Director, Greg Bauer, has attributed the recent downgrade of some of the world’s financial institutions to global meltdown.
According to him,  “all of the banks affected by the actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities.
“Financial markets have been bracing for the downgrades since February, when Moody’s Investors Service said it had launched a review of 17 banks with global capital markets operations. These companies faced diminished profitability and growth prospects due to difficult operating conditions, increased regulation and other factors”, Bauer said.