September 27, 2021/Fitch Ratings

Fitch Ratings has affirmed the National Long-Term Ratings of Nigeria-based Stanbic IBTC Holdings PLC (Stanbic IBTC) and its 99.9% owned subsidiary, Stanbic IBTC Bank PLC (Stanbic IBTC Bank), at ‘AAA(nga)’.

Key Rating Drivers

National Ratings

The ratings of Stanbic IBTC and Stanbic IBTC Bank are based on potential support from their ultimate parent, South Africa’s Standard Bank Group Limited (SBG), which owns 67% of Stanbic IBTC.

The ratings reflect SBG’s ability and willingness to support Stanbic IBTC and Stanbic IBTC Bank, if required. SBG’s ability to support considers its ‘BB-‘ Long-Term Issuer Default Rating (IDR), but is constrained by Nigeria’s Country Ceiling of ‘B’.

Fitch’s view of SBG’s willingness to support considers Stanbic IBTC’s strategic importance to SBG as the holding company for its leading banking and related financial services businesses in Nigeria – a key growth market for SBG’s Africa Regions strategy – and of Stanbic IBTC Bank, an integral part of its Nigerian operations. Our view of support also considers SBG’s controlling ownership of Stanbic IBTC, high operational integration with Stanbic IBTC Bank, shared branding, and Stanbic IBTC’s consistent and growing contribution to SBG’s earnings.

Stanbic IBTC’s main operating entity is Stanbic IBTC Bank, a leading corporate bank in Nigeria (with around 5% of banking sector assets), which formed 95% of the holding company’s consolidated assets at end-2020. Fitch believes that support from SBG, if needed, would extend equally to Stanbic IBTC and Stanbic IBTC Bank. Double leverage for Stanbic IBTC was moderate at 77% at end-1H21.

Stanbic IBTC Bank is highly integrated with SBG’s risk-management framework, operations and strategy. Being part of the largest financial services group in Africa provides Stanbic IBTC Bank with significant competitive advantages, including access to the SBG network and the ability to serve large domestic and multinational companies. Stanbic IBTC and Stanbic IBTC Bank benefit from intra-group liquidity and capital support, if needed, and access to wider wholesale funding sources.

Senior Debt

The ratings of senior unsecured obligations are in line with Stanbic IBTC Bank’s National Long-and Short-Term Ratings. This is because we view the likelihood of default on Stanbic IBTC Bank’s senior unsecured obligations as the same as the likelihood of default of the bank. Default on any material class of senior unsecured obligations would be treated as a default of Stanbic IBTC Bank.

Rating Sensitivities

Factors that could, individually or collectively, lead to negative rating action/downgrade:

• Stanbic IBTC’s and Stanbic IBTC Bank’s National Long-Term Ratings could be downgraded following a downgrade of SBG’s Long-Term IDR. Downside risks to the ratings could also stem from a decline in SBG’s willingness to provide support, or from a change in SBG’s stake, resulting in a loss of control. This is not our base line scenario.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

• Stanbic IBTC’s and Stanbic IBTC Bank’s National Long-Term Ratings are at the highest level on Fitch’s national rating scale and cannot be upgraded.

Public Ratings With Credit Linkage To Other Ratings

The ratings of Stanbic IBTC and Stanbic IBTC Bank are driven by the support from their ultimate parent, SBG.