Fitch Ratings has affirmed Fidelity Bank Plc’s credit rating at ‘B-‘ with a stable outlook, according to its recent report.
The global rating agency also upgraded the bank’s National Short-Term Rating to ‘F1+(nga)’ from ‘F1(nga)’.
The upgrade reflects improvement in the bank’s local-currency funding profile, evidenced by the increase in the share of low-cost current and savings accounts in customer deposit base to 87.1% at the end of Q1 2023 from 75% in 2021.
Fidelity Bank’s rating affirmation, Fitch noted, is driven by its standalone creditworthiness, as expressed by its Viability Rating (VR) of ‘b-‘, reflecting a growing franchise and a low share of impaired loans, as well as good capitalisation and funding.
In Nigeria, banks continue to contend with US dollar shortages and the Central Bank of Nigeria’s (CBN) highly burdensome cash reserve requirement.
Fitch expects reform progress under the new administration, including the elimination of fuel subsidies and gradual liberalisation of the naira.
However, Fitch said there is a risk of sharp naira depreciation due to the large disparity between the official and parallel exchange rates.
The CBN increased its policy rate by 700 basis points since April 2022 due to rising inflation.
Fidelity is Nigeria’s sixth largest bank, representing 5% of domestic banking system assets at end-2022. Strong balance sheet growth in recent years has increased market shares.
“We expect these to increase further but remain below those of the five largest banking groups,” Fitch added.
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