Announcements Financial Institutions Rating Alerts

GCR Assigns a Final Rating of AA-(NG) to Stanbic IBTC Bank PLC N150.0bn SNP Series 1 Notes.

Lagos, 05 February 2019–Global Credit Ratings has accorded a final, public the national scale long-term credit rating of AA-(NG) to Stanbic IBTC Bank PLC’s N30bn Series 1 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 rating is valid until June 2019.

RATING RATIONALE

Global Credit Ratings has accorded the above final credit ratings based on the following key criteria:

Stanbic IBTC is a mid-sized player in Nigeria, a wholly owned subsidiary of 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%.

The rating reflects the ranking of the obligations under the Issue, being senior unsecured debt (ranking at par with all senior indebtedness of the Issuer). Accordingly, the Series 1 Notes has been accorded national scale long-term rating of AA-(NG), at par with the national scale long term rating of the Issuer.

In the absence of a third party guarantee, timely performance of the Issuer’s obligations under the Issue solely depends on its financial performance. As such, the accorded rating 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

Initial/ last rating^ (July 2018)
Long term: AA-(NG)
Outlook: Positive

^Indicative rating

ANALYTICAL CONTACTS

Primary Analyst
Julius Adekeye
+23 41 904 9462-3
adekeye@globalratings.net

Committee Chairperson
Dave King
king@globalratings.net

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

Global Criteria for Rating Banks and Other Financial Institutions, updated March 2017
Issuer rating reports, up to 2018
Glossary of Terms/Ratios (February 2016)

RATING LIMITATIONS AND DISCLAIMERS

ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.COM.NG.

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 rating was solicited by, or on behalf of Stanbic IBTC Bank PLC, and therefore, GCR has been compensated for the provision of the rating.

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 rating above was disclosed to Stanbic IBTC Bank PLC with no contestation of/changes to the rating.

The information received from Stanbic IBTC Bank PLC to accord the credit rating included the Issuer’s 31 December 2017 audited financial statements, audited interim accounts for the six month period to 30 June 2018, the Master Trust Deed for the Structured Note Programme, the Programme Shelf Prospectus, the Series 1 Trust Deed, as well as the Pricing Supplement for the Series 1 Notes.

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ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK:HTTP://GCRRATINGS.COM. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT WWW.GCRRATINGS.COM/RATING_INFORMATION. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR's CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THIS SITE.

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