June 24, 2024

#Fitch’s Nod to #Fidelity: Bank’s Long-Term #IDR Upgraded to ‘Positive’ with Robust #Capital Prospects

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#Fitch’s Nod to #Fidelity: Bank’s Long-Term #IDR Upgraded to ‘Positive’ with Robust #Capital Prospects

#Fitch’s Nod to #Fidelity: Bank’s Long-Term #IDR Upgraded to ‘Positive’ with Robust #Capital Prospects

Fitch Ratings has revised the outlook on Fidelity Bank PLC’s LongTerm Issuer Default Rating (IDR) to Positive from Stable, while affirming the rating at ‘B-‘.

The credit rating agency has also affirmed Fidelity Bank’s National Long-Term Rating at ‘A(nga)’ with a Stable Outlook.

In a statement released on Friday, Fitch said that the outlook revision reflects its, “expectations that the bank’s capitalisation will strengthen in the near term as a result of core capital issuances, including to meet the new paid-in capital requirement of N500 billion for banks with an international licence effective by end-1Q26.”

According to the statement: “Fidelity’s IDRs are driven by its standalone creditworthiness, as expressed by its Viability Rating (VR) of ‘b-‘. The VR balances the concentration of operations in Nigeria’s challenging operating environment, very high credit concentration and high Stage 2 loans against a growing franchise, sound profitability metrics, good capital buffers and reasonable foreign-currency (FC) liquidity coverage.

“Fidelity’s National Ratings are driven by its standalone creditworthiness. They balance a growing franchise and good capital buffers against weaker profitability than higher rated peers.”

The rating agency said that Fidelity is Nigeria’s sixth-largest bank, as it accounted for 5% of domestic banking system assets at end-2023, adding that strong balance-sheet growth in recent years has increased bank’s market shares and that it expects these to increase further but remain below those of the five largest banking groups.

#Fitch’s Nod to #Fidelity: Bank’s Long-Term #IDR Upgraded to ‘Positive’ with Robust #Capital Prospects

On factors that could lead to negative rating action/downgrade, the agency said: “A sovereign downgrade could result in a downgrade of Fidelity’s VR and Long-Term IDR if Fitch believes that the direct and indirect effects of a sovereign default would be likely to have a sufficiently large effect on capitalisation and foreign-currency liquidity to undermine the bank’s viability. However, this is unlikely considering the Positive Outlook on Nigeria’s Long-Term IDRs.”

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