S&P affirms First Bank of Nigeria

Standard & Poor's said it affirmed its long- and short-term counterparty credit ratings on First Bank of Nigeria Ltd. at B+/B.

The outlook is stable.

At the same time, the agency affirmed the bank’s long- and short-term Nigeria national scale ratings at ngA/ngA-1.

In addition, S&P affirmed its B-/C counterparty credit and ngBB+/ngB Nigeria national scale ratings on First Bank of Nigeria’s nonoperating holding company FBN Holding plc.

The outlook on the long-term counterparty credit rating is stable.

Economic risk in the Nigerian banking system has increased markedly over the past six months due to the significant drop in oil price since June 2014.

The affirmation reflects S&P’s view that First Bank of Nigeria is well placed to resist the economic uncertainties prevailing in Nigeria. Underpinning the agency’s assumptions are the bank’s dominant market position, its access to low-cost funding, supported by having the largest retail franchise in Nigeria and moderate credit growth.

As a result, S&P anticipates that margins will remain resilient, despite a compression in 2015. That said, while First Bank of Nigeria underwrites robust exposures in the corporate sector, its exposures to small and midsize businesses are likely to cause higher credit losses in 2015 compared with 2014.

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