Rating agency, Fitch, has affirmed Access Bank Plc’s Long-Term Issuer Default Rating (IDR) at ‘B-‘ with a Stable Outlook.
It also affirmed the bank’s National Long-Term Rating at ‘A+(nga)’ and assigned a Stable Outlook.
According to Fitch, Access Bank’s National Long-Term Rating balances its leading franchise against weaker core capitalisation and profitability than higher-rated peers.
Again, Access Bank’s IDRs, it said, are driven by its standalone creditworthiness, as expressed by its ‘b-‘ Viability Rating (VR).
Leading Franchise
Access Bank is Nigeria’s largest bank group, accounting for 16% of banking system assets at end-2022.
According to Fitch, it has acquired several small banks in other Sub-Saharan African countries in recent years, in line with its African expansion strategy.
It expects acquisitions to continue, strengthening Access Bank’s franchise and geographical diversification.
It has a record of integrating domestic acquisitions but the large number of cross-border acquisitions creates execution risks and may pressure capital.
High Sovereign Exposure
Fitch said the single-obligor credit concentration is high, with the 20 largest loans representing 193% of Fitch Core Capital (FCC) at end-2022.
Oil and gas exposure (23% of gross loans at end-2022) is material but lower than at other domestic systemically important banks (D-SIB).
Fitch added that Nigeria sovereign exposure through securities and CBN cash reserves is very high relative to FCC (over 600% at end-2022).
Challenging operating environment
It noted that bankscontinue to contend with US dollar shortages and the Central Bank of Nigeria’s (CBN) highly burdensome cash reserve requirement.
It therefore expects reform progress under the new administration, including elimination of fuel subsidies and gradual liberalization of the naira.
However, there is a risk of a sharp depreciation due to the large disparity between the official and parallel exchange rates.
