Announcements Financial Institutions Rating Alerts

GCR Upgrades Stanbic IBTC Bank PLC’s SNP2 N30bn Series 1 Senior Unsecured Notes to AA+(NG); Stable Outlook

Lagos, 30 June 2021 – GCR Ratings (“GCR”) has upgraded the national scale long term credit ratings accorded to Stanbic IBTC Bank PLC’s Structured Note Programme (“SNP”) 2 Series 1 Senior Unsecured Notes to AA+(NG) from AA(NG), with a Stable Outlook.

Issue Rating class Rating scale Rating Outlook
N30bn Series 1 Senior Unsecured Long term issue National AA+(NG) Stable

Rating Rationale

Stanbic IBTC Bank PLC’s (“Stanbic IBTC” or “the Issuer”) national scale long term Issuer rating was recently upgraded to AA+(NG) from AA(NG), underpinned by its sustained adequate capitalisation and sound asset quality amidst the strains in the operating environment. Given the status of the N30bn Series 1 Notes as senior unsecured, the accorded long term issue rating has been upgraded to AA+(NG) from AA(NG), reflective of the one notch upgrade in the Issuer ‘s rating.

Stanbic IBTC’s SNP 2 Series 1 senior unsecured Notes of N30bn was issued in December 2018 under the N150bn SNP. Particularly, the SNPs Trust Deeds permit the Issuer to exercise its discretion in determining the number of issues, as well as the forms, terms and conditions of the Notes to be issued under the SNPs. Accordingly, the SNP Notes constitute direct, senior unsecured obligations of the Issuer. The Series 1 Notes constitute senior, direct, irrevocable, and unsubordinated obligations of the Issuer, and shall rank pari passu without any preference among themselves and all unsecured and unsubordinated indebtedness and monetary obligations of the Issuer, present and future, but in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights.

Being senior unsecured debt, the Notes bear the same probability of default as the Issuer and would reflect similar recovery prospects to senior unsecured creditors in the event of a default.

According to the period performance reports provided to GCR by the Trustees to the Noteholders, dated 18 June 2021, the Issuer has been meeting all its obligations under the Note issues on a timely basis so far, with total coupon payment till date amounting to N11.8bn.

Outlook Statement

The stable outlook reflects GCR’s expectation that Stanbic IBTC’s financial profile would remain resilient despite the strains in the operating environment. We anticipate a strong GCR core capital ratio, underpinned by solid internal capital generation and adequate loan loss reserving. Credit losses and NPL ratio are expected to be sustained at strong range, albeit with the loan book concentration by obligor and FCY anticipated to remain high. We also factored in adequate liquidity on account of the highly liquid balance sheet.

Rating Triggers

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.

Analytical Contacts

Primary analyst Yinka Adeoti Financial Institutions Analyst
Lagos, NG Adeoti@GCRratings.com +234 1 904 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 Scale, Symbols & Definitions, May 2019
GCR Nigeria Country Risk Scores, February 2021
GCR Nigeria Financial Institutions Sector Risk Score, February 2021

Ratings History

Stanbic IBTC Bank PLC- N30bn Senior Unsecured Notes

Rating class Review Rating scale Rating Outlook Date
Long Term Issue Initial National AA-(NG) Stable January 2019
Long Term Issue Last National AA(NG) Stable August 2020

Risk Score Summary of the Issuer

Rating Components & Factors Risk scores
Operating environment 7.25
Country risk score 3.75
Sector risk score 3.50
Business profile 1.00
Competitive position 1.00
Management and governance 0.00
Financial profile 1.00
Capital and Leverage 0.50
Risk 0.50
Funding and Liquidity 0.00
Comparative profile 1.50
Group support 1.50
Government support 0.00
Peer analysis 0.00
Total Score 10.75

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 Ratings

GCR affirms that a.) no part of the rating 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 rating has been disclosed to Stanbic IBTC Bank PLC. The rating above was solicited by, or on behalf of, the rated entity, and therefore, GCR has been compensated for the provision of the rating.

Stanbic IBTC Bank PLC participated in the rating process via telephonic management meetings, and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible. The information received from Stanbic IBTC Bank PLC and other reliable third parties to accord the indicative rating included:

  • The audited financial results as at 31 December 2020
  • Four years of comparative audited numbers
  • Management account as at 31 March 2021
  • Trustees’ performance reports up to June 2021
  • Other related documents.


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