Johannesburg, 26 Jul 2013 — Global Credit Ratings has assigned Access Bank Nigeria initial national scale issuer ratings of A(NG) and A1(NG) in the long term and short term respectively; with the outlook accorded as Stable. The rating(s) are valid until 7/2014.
Global Credit Ratings has accorded the above credit rating(s) on Access Bank Nigeria based on the following key criteria:
Although Access Bank Plc (“Access” or “the bank”) is a comparatively young bank by Nigerian standards, having operated for less than two and half decades, it presently ranks among the Tier 1 banks in the country by asset size and geographic presence/foot print, achieved through a combination of organic and inorganic growth strategies. Access’ systemic important status, with the likelihood of state support (if necessary), was equally taken cognisance of.
Total impaired credits declined by 17.6% to N46.3bn in F12, bringing down the gross non-performing loan ratio (“NPL”) to 5.3% (F11:9%), albeit still higher than its peers’. Access’ loan book was favourably impacted by a clean-up of the bank’s loan book in F11, through write-offs and the sale of impaired credits to the Asset Management Corporation of Nigeria (“AMCON”). Although there were no further write-offs or sales to AMCON by the bank in F12, it was noted that loans worth N73bn were restructured. The bank’s arrears coverage ratio of 70.6% is considered strong (although lower than the 77.6% held in F11), while its strong loss absorption capacity (reflected in the negative net NPL/capital ratio) was equally noted. Although Access’ risk management has undergone a significant scale-up in recent years, the effectiveness of the bank’s internal recovery systems will be fully tested during F13, as AMCON has indicated its unwillingness to purchase non-performing assets from banks.
Access’ profitability track record has remained firm over the past 3 years, following its recovery from an after tax loss of N881m in 2009. The accounting based measurement changes pruned net income growth of 40.8% in F11, to a much lower 26.4%. However, a review period high total comprehensive income of N35bn was achieved in F12, representing a 35.1% growth over F11. Improved efficiency was equally reflected in the consistent downward trend in the cost ratio over the past 3 years, with the ratio improving to 61% in F12. However, the pre-tax profit of N11bn (reported for the first quarter of F13) lagged the bank’s forecast for the full year by 35%, with the variance arising mainly from lower than expected growth in funding and earning assets.
Access’ ability to sustain the performance track record seen thus far and improving asset quality will be positively considered. The ratings will be sensitive to any pressure on efficiency, profitability and asset quality.
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The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.
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GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument.
Access Bank Nigeria participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of info received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to Access Bank Nigeria with no contestation of the rating.
The information received from Access Bank Nigeria and other reliable third parties to accord the credit rating included the latest available audited annual financial statements (plus four years of comparative numbers), latest internal and/or external report to management, full year detailed budgeted financial statements, most recent year to date management accounts, corporate governance and enterprise risk framework, reserving methodologies, capital management policy, Industry comparative data and regulatory framework and a breakdown of facilities available and related counterparties.