Stanbic IBTC Holdings Receives ‘AAA(nga)’ Rating Affirmation From Fitch Ratings

Stanbic IBTC Holdings PLC, a leading end-to-end financial institution in Nigeria, has received a significant affirmation of its creditworthiness as Fitch Ratings reaffirms its National Long-Term Ratings at ‘AAA(nga)’ with a Stable Outlook.

The rating also extends to its subsidiary, Stanbic IBTC Bank PLC, highlighting its strong support from its ultimate parent, Standard Bank Group Limited (SBG) of South Africa, and underscores its resilience in a challenging operating environment.

Fitch Ratings, a globally recognized credit rating agency, considered Standard Bank Group’s controlling ownership of Stanbic IBTC, its strategic importance as the holding company for leading Corporate and Investment Banking (CIB) and Wealth businesses in Nigeria, and the integral role of Stanbic IBTC Bank in Standard Bank Group‘s Nigerian operations. The agency acknowledged the high level of integration, shared branding, and the modest contribution to net income as factors contributing to SBG’s propensity and ability to support both entities, as reflected in its ‘BB-‘ rating and Nigeria’s ‘B-‘ Country Ceiling.

Dr. Demola Sogunle, Chief Executive, of Stanbic IBTC Holdings, expressed his satisfaction with the rating affirmation, stating, “We are delighted with Fitch Ratings’ affirmation of our ‘AAA(nga)’ ratings, which underscores our financial strength and stability in the Nigerian market. This rating affirms our commitment to maintaining a solid capital base, sound asset quality, and profitability. It also reinforces our stakeholders’ confidence in our ability to navigate challenging operating conditions.”

Despite the risks associated with the exchange rate disparity, the agency acknowledges Stanbic IBTC’s leading position as a domestic universal bank in Nigeria, comprising a significant portion of the Bank’s consolidated assets.

Stanbic IBTC’s sound asset quality is evident in its impaired loans ratio, which stood at 2.5% at the end of the first quarter of 2023, with total reserves coverage of bad loans at a robust 121%. The institution has demonstrated strong and consistent profitability, with an operating profit-to-risk-weighted assets ratio of 7.7% in the first quarter of 2023, driven by a wider net interest margin and trading gains. Its solid capitalization, reflected in a CET1 ratio of 18.4%, provides a substantial buffer over regulatory requirements under Basel III.

Mr. Wole Adeniyi, Chief Executive, of Stanbic IBTC Bank also added, “Our diversified business model, sustained growth in net fees and commissions, and prudent risk management practices will continue to drive our profitability and solidify our position as a leading financial institution in Nigeria.”

Stanbic IBTC Bank has established an entrenched funding profile, although it maintains a higher loan-to-customer deposits ratio than peers due to its modest retail franchise and greater reliance on wholesale funding. Nevertheless, the Bank’s funding profile remains stable, supported by its good brand recognition and a significant share of current and savings accounts (CASA) deposits. The institution also maintains sufficient liquidity buffers in local and foreign currency.

The rating affirmation from Fitch Ratings provides confidence in Stanbic IBTC’s financial strength, resilience, and ability to weather the challenges in the Nigerian banking industry. It highlights the unwavering support of its ultimate parent, Standard Bank Group, and solidifies Stanbic IBTC’s position as a leading player in the Nigerian financial market.