Standard & Poor, the global rating agency, has assigned ‘B/B’ counterparty credit and ‘ngBBB/ngA-2’ national scale ratings to Skye Bank Plc.
According to the rating agency, the stable outlook assigned to the bank indicates the bank’s business and financial profile will remain broadly unchanged over the next 12 months.
It also forecasts that the positive economic prospects in the country may support the bank’s earnings growth.
S&P said Skye Bank had a modest but profitable franchise, which accounted for about five per cent of the Nigerian market, with a little over N1tn ($6.9bn) in assets.
“Similar to peers in Nigeria, the bank is largely funded by customer deposits, which accounted for 70 per cent of the total funding base. Deposits are remarkably stable, despite their contractually short-term nature,†S& P noted.
Remarking on the bank’s plan to issue debt in 2013 to lengthen its deposit maturity profile and liquidity gap, the agency noted the bank also had huge investment in government securities, which it said balanced its view of otherwise strong liquidity.
“We anticipate that Skye Bank will maintain a RAC ratio of about five per cent through 2014, on the back of moderate loan growth, good net interest margins, low cost of risk, and fairly high dividend payouts,†S&P said.
The agency said it could raise the ratings if Skye Bank demonstrated a stronger track record in underwriting, and a history of low and stable loan losses with adequate loan-loss reserving, which would lead to a stronger risk position for the bank.
Source: Punch
