Announcements Financial Institutions Rating Alerts

GCR places First Bank of Nigeria Limited’s Long and short-term A-(NG)/ A2(NG) national scale ratings on Negative Rating Watch following the removal of the board by the regulator.

Lagos, 05 May 2021 – GCR Ratings (“GCR”) has placed First Bank of Nigeria Limited’s (“the bank”) long and short-term national scale ratings of A-(NG) and A2(NG) respectively on “Negative Rating Watch” after reconstitution of the bank’s (and Holding Company) board of directors by the Central bank of Nigeria (“CBN”). The CBN made its intervention following the banking group attempt to remove the Managing Director, Dr. Adesola Adeduntan, without first seeking regulatory approval. Subsequently, the CBN has reinstated Dr. Adeduntan.

GCR would continue to monitor events as they unfold and expects to resolve the watch within the next three months.

Rated Entity Rating class Rating scale Rating Outlook/Watch
First Bank of Nigeria Limited Long Term issuer National A-(NG) Negative Rating Watch
Short Term issuer National A2(NG)

Analytical contacts

Primary analyst Yinka Adeoti Financial Institutions Analyst
Lagos, NG Adeoti@GCRratings.com +2341 904 9462
Committee chair Matthew Pirnie Group Head of Ratings
Johannesburg, ZA MatthewP@GCRratings.com +27 11 784 1771

Related criteria and research

Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Financial Institutions, May 2019
GCR Ratings Scales, Symbols & Definitions, May 2019
GCR Country Risk Scores, February 2021
GCR Financial Institutions Sector Risk Score, February 2021

Ratings history

First Bank of Nigeria Limited

Rating class Review Rating scale Rating Outlook/Watch Date
Long Term issuer Initial National AA(NG) Stable Outlook September 2006
Short Term issuer Initial National A1+(NG) September 2006
Long Term issuer Last National A-(NG) Positive Outlook September 2020
Short Term issuer Last National A2(NG) September 2020

Glossary

Balance Sheet Also known as Statement of Financial Position. A statement of a company’s assets and liabilities provided for the benefit of shareholders and regulators. It gives a snapshot at a specific point in time of the assets the company holds and how they have been financed.
Capital The sum of money that is invested to generate proceeds.
Cash Funds that can be readily spent or used to meet current obligations.
Debt An obligation to repay a sum of money. More specifically, it is funds passed from a creditor to a debtor in exchange for interest and a commitment to repay the principal in full on a specified date or over a specified period.
Diversification Spreading risk by constructing a portfolio that contains different exposures whose returns are relatively uncorrelated. The term also refers to companies which move into markets or products that bear little relation to ones they already operate in.
Exposure Exposure is the amount of risk the holder of an asset or security is faced with as a consequence of holding the security or asset. For a company, its exposure may relate to a particular product class or customer grouping. Exposure may also arise from an overreliance on one source of funding. In insurance, it refers to an individual or company’s vulnerability to various risks
Income Money received, especially on a regular basis, for work or through investments.
Interest Scheduled payments made to a creditor in return for the use of borrowed money. The size of the payments will be determined by the interest rate, the amount borrowed or principal and the duration of the loan.
Issuer The party indebted or the person making repayments for its borrowings.
Leverage With regard to corporate analysis, leverage (or gearing) refers to the extent to which a company is funded by debt.
Liquidity The speed at which assets can be converted to cash. It can also refer to the ability of a company to service its debt obligations due to the presence of liquid assets such as cash and its equivalents. Market liquidity refers to the ease with which a security can be bought or sold quickly and in large volumes without substantially affecting the market price.
Long Term Rating See GCR Rating Scales, Symbols and Definitions.
Margin A term whose meaning depends on the context. In the widest sense, it means the difference between two values.
Market An assessment of the property value, with the value being compared to similar properties in the area.
Maturity The length of time between the issue of a bond or other security and the date on which it becomes payable in full.
Rating Outlook See GCR Rating Scales, Symbols and Definitions.
Risk The chance of future uncertainty (i.e. deviation from expected earnings or an expected outcome) that will have an impact on objectives.
Short Term Rating See GCR Rating Scales, Symbols and Definitions.
Short Term Current; ordinarily less than one year.

SALIENT POINTS OF ACCORDED RATING

GCR affirms that a.) no part of the rating process was influenced by any other business activities of the credit rating agency; b.) the ratings were based solely on the merits of the rated entity, security or financial instrument being rated; and c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument.

The credit ratings have been disclosed to First Bank of Nigeria Limited. The rating above was solicited by, or on behalf of, the rated entity, and therefore, GCR has been compensated for the provision of the ratings.

First Bank of Nigeria Limited participated in the rating process via video conference management meetings, and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.



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