Fitch Ratings Affirms Stanbic IBTC Holdings’ ‘AAA(nga)’ Rating

Stanbic IBTC Holdings, a prominent financial institution in Nigeria, has received a strong vote of confidence in its creditworthiness as Fitch Ratings reaffirms its National Long-Term Ratings at ‘AAA(nga)’ with a Stable Outlook.

This positive rating also extends to its subsidiary, Stanbic IBTC Bank, underscoring its robust support from its parent company, Standard Bank Group Limited of South Africa, and showcasing its resilience in a challenging operating environment.

Fitch Ratings, a globally recognized credit rating agency, took into account the controlling ownership of Stanbic IBTC by Standard Bank Group, 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 within 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 that contribute to SBG’s ability and willingness 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 pleased with Fitch Ratings’ affirmation of our ‘AAA(nga)’ ratings, which highlights our financial strength and stability in the Nigerian market. This rating confirms our commitment to maintaining a strong capital base, sound asset quality, and profitability. It also reinforces the confidence of our stakeholders in our ability to navigate challenging operating conditions.”

Despite the risks associated with exchange rate disparities, Fitch Ratings acknowledges Stanbic IBTC’s leading position as a domestic universal bank in Nigeria, representing 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 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 that exceeds regulatory requirements under Basel III.

Mr. Wole Adeniyi, Chief Executive of Stanbic IBTC Bank, 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 a well-rounded funding profile, although it maintains a higher loan-to-customer deposits ratio compared to its peers due to its modest retail franchise and greater reliance on wholesale funding. Nevertheless, the Bank’s funding profile remains stable, supported by its strong brand recognition and a significant share of current and savings accounts (CASA) deposits. The institution also maintains adequate liquidity buffers in local and foreign currency.

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