Nigerian banks’ asset quality remain resilient, Moody affirms

Global rating agency, Moody’s Investor Service has highlighted the improving asset quality and resilient profitability of nine Nigerian banks, and also affirmed B2 long-term local and foreign currency deposit ratings as well as senior unsecured ratings.

The rating agency listed the banks as: Access Bank Plc, Zenith Bank Plc, First Bank of Nigeria Limited, United Bank for Africa Plc, Guaranty Trust Bank Plc, and Union Bank of Nigeria plc, Fidelity Bank plc, FCMB Limited and Sterling Bank Plc.

At the same time, the rating agency changed the outlook on all the banks’ long-term deposit ratings to stable from negative.

The rating action reflects the banks’ financial profiles which have been generally resilient to the difficult operating environment in Nigeria. On average, the Nigerian banks’ asset quality has remained resilient and banks’ pre-provision profitability is recovering to pre-pandemic levels while their capital and funding positions, particularly in local currency, have remained solid.

The affirmation of the deposit ratings for the nine banks reflects Moody’s expectation that Nigerian banks’ solvency will remain at adequate levels over the next 12-18 months, supported by resilient profitability, while asset quality towards the large energy sector will benefit from the current high oil prices.