Rating agency, Standard and Poor’s (S&P), has assigned ‘B/B’ counterparty credit and ‘ngBBB/ngA-2’ national scale ratings to Skye Bank Plc.
The rating agency said the stable outlook assigned to the bank reflects the bank’s business and financial profile which would remain broadly unchanged over the next 12 months. It also forecasts that the positive economic prospects in the country will further support the bank’s earnings growth.
“Our ratings on Skye Bank reflect its anchor of ‘bb-’, as well as our view of its “moderate” business position, “moderate” capital and earnings, “moderate” risk position, “average” funding, and “adequate” liquidity.”
S&P said Skye Bank has a modest, but profitable franchise, which accounts for about 5 per cent of the Nigerian market, with a little over N1 trillion (US$6.9 billion) in assets.
“We view Skye Bank’s overall funding and liquidity as adequate. Similar to peers in Nigeria, the bank is largely funded by customer deposits, which accounted for 70 per cent of the total funding base.
Deposits are remarkably stable, despite their contractually short-term nature”, S& P stated.
While noting the bank’s plan to issue debt in 2013 to lengthen its deposit maturity profile and liquidity gap, the agency said the bank also has huge investment in government securities which balances our view of otherwise strong liquidity.”
In the firm’s view, Skye Bank is moderately capitalized, with a Standard & Poor’s risk-adjusted capital (RAC) ratio, before adjustments, of 5.5 per cent at December 31, 2012.
“We anticipate that Skye Bank will maintain a RAC ratio of about 5% through 2014, on the back of moderate loan growth, good net interest margins, low cost of risk, and fairly high dividend payouts” S&P said.
© anu for Royal Times of Nigeria Newspaper, 2013. |
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