Global Credit Rating Agency, Fitch Ratings has affirmed Fidelity Bank Plc’s credit rating at ‘B-‘ with a stable outlook.
Gatekeepers News reports that Fitch Ratings Inc is a leading provider of credit ratings, commentary and research for global capital markets.
The American rating agency in it’s recent report, also upgraded the bank’s National Short-Term Rating to ‘F1+(nga)’ from ‘F1(nga)’.
Fitch said the upgrade reflects the improvement in the bank’s local-currency funding profile, as evidenced by the increase in the share of low-cost current and savings accounts in the bank’s customer deposit base to 87.1% at the end of the first quarter (1Q2023) from 75% in 2021.
According to Fitch, Fidelity Bank’s rating affirmation is driven by its standalone creditworthiness, as expressed by its Viability Rating (VR) of ‘b-‘, reflecting a growing franchise and a low share of impaired loans, as well as good capitalisation and funding.
In Nigeria, banks continue to contend with US dollar shortages and the Central Bank of Nigeria’s (CBN) highly burdensome cash reserve requirement. Fitch expects reform progress under the new administration, including the elimination of fuel subsidies and gradual liberalisation of the naira.
However, Fitch said there is a risk of sharp naira depreciation due to the large disparity between the official and parallel exchange rates. The CBN has increased its policy rate by 700 basis points since April 2022 due to rising inflation.
Fidelity is Nigeria’s sixth-largest bank, representing 5% of domestic banking system assets at end-2022. Strong balance sheet growth in recent years has increased market shares. “We expect these to increase further but remain below those of the five largest banking groups.”, Fitch said.
