Lagos, 03 December 2018–Global Credit Ratings has affirmed the national scale long-term credit ratings of A(NG) accorded to the Series 1 (Tranche A and Tranche B) Notes issued under Stanbic IBTC Bank PLC’s (“Stanbic IBTC” or “the bank” or “the Issuer”) N150bn Structured Note Programme (“SNP”); with a Stable Outlook. The ratings are valid until September 2019.
· Series 1 (Tranche A) N100.0m 10-year Subordinated Notes, issued September 2014.
· Series 1 (Tranche B) N15.44bn 10-year Subordinated Notes, issued September 2014.
Global Credit Ratings has accorded the above final credit ratings based on the following key criteria:
The ratings reflect the unsecured and subordinated nature of the Series 1 (Tranche A and Tranche B) Notes, ranking after all senior indebtedness and the claims of depositors of the Issuer. As such, the accorded ratings are 2 notches lower than the Issuer’s national scale long-term rating of AA-(NG).
Stanbic IBTC is a mid-sized player in Nigeria, wholly owned subsidiary by Stanbic IBTC Holdings PLC (“the Holdco” or “the group”), a member of the Standard Bank Group (“SBG”). The group’s key rating strength is the implied financial and technical support from its ultimate parent, SBG (the largest banking group in Africa based on balance sheet size and earnings).
Stanbic IBTC registered an after tax profit of N28.8bn in FY17, representing a notable 91.9% year-on-year growth and yielding an improved ROaE and ROaA of 23.3% and 2.6% in FY17 (FY16: 14.7% and 1.6%) respectively. 1H FY18 performance was ahead of budget, with pre-tax profit registering an annualised growth of 156.8%. While net interest income lagged budget, the variance was more than offset by favourable variance in non-funded revenue. Modest increase in operating expenses, coupled with recoveries from bad debts (totalling N5.5bn), further supported bottom line performance.
Liquidity is maintained at good levels, with the cash & liquid assets/ total short-term funding ratio standing at 59.7% at 1H FY18, while the statutory liquidity ratio was maintained at above 83.1%.
Per the quarterly performance reports provided by the Trustee to the Noteholders, in the period to 30 September 2018, the Issuer has met all its obligations under the Series 1 Issuance on a timely basis.
The accorded ratings would be sensitive to a positive rating action on the Issuer. Non-compliance with the set covenants or a downgrade in the Issuer’s rating could trigger a negative rating action.
NATIONAL SCALE RATINGS HISTORY
Series 1(Tranche A) Series 1(Tranche B)
Initial rating (July 2014) Initial rating (July 2014)
Long Term: A(NG) Long Term: A(NG)
Outlook: Positive Outlook: Positive
Last rating (October 2017) Last rating (October 2017)
Long Term: A(NG) Long Term: A(NG)
Outlook: Stable Outlook: Stable
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APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Criteria for Rating Banks and Other Financial Institutions, updated March 2017
Previous Issue rating reports (2014-17)
Issuer rating reports, up to 2018
Glossary of Terms/Ratios (February 2016)
RATING LIMITATIONS AND DISCLAIMERS
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SALIENT FEATURES OF ACCORDED RATINGS
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; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for 12 months, or as indicated by the applicable credit rating document.
The ratings were solicited by, or on behalf of Stanbic IBTC Bank PLC, and therefore, GCR has been compensated for the provision of the ratings.
Stanbic IBTC Bank PLC 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 ratings above were disclosed to Stanbic IBTC Bank PLC with no contestation of/changes to the ratings.
The information received from Stanbic IBTC Bank PLC and United Capital Trustees Limited to accord the credit ratings included the Issuer’s 31 December 2017 audited financial statements, audited interim accounts for the six month period to 30 June 2018, Trustees’ performance reports up to September 2018, the Master Trust Deed for the Structured Note Programme, the Programme Shelf Prospectus, the Series 1 (Tranche A and Tranche B) Trust Deeds, as well as the relevant Supplemental Shelf Prospectuses.