Fitch Affirms Fidelity Bank Ratings with Stable Outlook

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Fitch Ratings has affirmed Fidelity Bank Plc’s credit rating at ‘B-‘ with a stable outlook, according to its recent report. The global rating agency also upgraded the bank’s National Short-Term Rating to ‘F1+(nga)’ from ‘F1(nga)’.

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It 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.

Naija247news
Naija247newshttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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