GCR Affirms Stanbic IBTC Bank PLC SNP Series 1 (Tranche A and Tranche B) Notes Ratings of A(NG).

03 Apr 2017 In Rating Notifications

GCR Affirms Stanbic IBTC Bank PLC SNP Series 1 (Tranche A and Tranche B) Notes Ratings of A(NG).

Lagos, 04 April 2017—Global Credit Ratings has today affirmed the national scale long-term credit ratings of A(NG) accorded to the Series 1 (Tranche A and Tranche B) Notes issued under Stanbic IBTC Bank PLC’s (“Stanbic” or “the bank” or “the Issuer”) N150bn Structured Note Programme (“SNP”); with a Stable Outlook. The ratings are valid until August 2017.

·      Series 1 (Tranche A) N100.0m 10-year Subordinated Notes, issued September 2014.
·      Series 1 (Tranche B) N15.44bn 10-year Subordinated Notes, issued September 2014.

RATING RATIONALE

Global Credit Ratings has accorded the above final credit ratings based on the following key criteria:

The ratings reflect Stanbic’s status as an indirect subsidiary of Standard Bank Group (“SBG”), although it is a mid-sized player in the Nigerian commercial banking space. The implied financial and technical support from its ultimate parent, SBG, has been positively considered. SBG is Africa’s largest banking group ranked by assets and earnings.

The accorded ‘Stable’ rating outlook reflects the significant progress recorded in the resolution of some key issues relating to the court case between Stanbic and the Financial Reporting Council (“FRC”). GCR had earlier (in September 2016) placed the bank on ‘Rating Watch’ subsequent to FRC’s sanction on the bank for the treatment of certain transactions between Stanbic and its foreign technical partner, Standard Bank of South Africa Limited.

The Issuer reported a pre-tax profit of N14.9bn for FY16, translating to a significant 232.1% increase over the previous year’s level. Performance was underpinned by strong income growth, with total operating income rising by 31.9%. Although the impairment charge and operating expenses rose by 32.6% and 13.6% respectively, the effect on performance was effectively neutralised by the outpacing growth in operating income.

Per the quarterly performance reports provided by the Trustee to the Noteholders, in the period to 28 February 2017, the Issuer has met all its obligations under the Series 1 Issuance on a timely basis.

The ratings reflect the unsecured and subordinated nature of the Series 1 (Tranche A and Tranche B) Notes, ranking after all senior indebtedness and the claims of depositors of the Issuer. As such, the accorded ratings are 2 notches lower than the Issuer’s national scale long-term rating of AA-(NG)

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Timely fulfilment of the Issuer’s obligations under the Issues solely depend on its financial performance. Thus, the accorded ratings would be sensitive to a positive rating action on the Issuer. Non-compliance with the set covenants or a downgrade in the Issuer’s rating could trigger a negative rating action.


NATIONAL SCALE RATINGS HISTORY
Series 1 (Tranche A)                                                               
Initial rating (July 2014)                                         
Long term: A(NG)                                                                                   
Outlook: Positive                                                                        

Last rating (September 2016)                       
Long term: A(NG)                                                           
Outlook: Rating Watch
                                   
Series 1 (Tranche B)
Initial rating (July 2014)                       
Long term: A(NG)                                                           
Outlook: Positive
                                   
Last rating (September 2016)                       
Long term: A(NG)                                                           
Outlook: Rating Watch
                                   
ANALYTICAL CONTACTS

Primary Analyst                                     
Julius Adekeye                                        
+23 41 462 2545                                      
.(JavaScript must be enabled to view this email address)

Committee Chairperson
Dave King
.(JavaScript must be enabled to view this email address)

APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Criteria for Rating Banks and Other Financial Institutions, updated March 2016
Previous Issue rating reports (2014-16)
Glossary of Terms/Ratios (February 2016)

RATING LIMITATIONS AND DISCLAIMERS

ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK:  HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.COM.NG.

SALIENT FEATURES OF ACCORDED RATINGS

GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for 12 months, or as indicated by the applicable credit rating document.


The ratings were solicited by, or on behalf of Stanbic IBTC Bank PLC, and therefore, GCR has been compensated for the provision of the ratings.

Stanbic IBTC Bank PLC participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of info received was considered adequate and has been independently verified where possible.

The credit ratings above were disclosed to Stanbic IBTC Bank PLC with no contestation of/changes to the ratings.

The information received from Stanbic IBTC Bank PLC and United Capital Trustees Limited to accord the credit ratings included the Issuer’s audited annual financial statements for the year ended 31 December 2016, quarterly Trustees’ performance reports up to February 2017, the Master Trust Deed for the Structured Note Programme, the Programme Shelf Prospectus, the Series 1 (Tranche A and Tranche B) Trust Deeds, as well as the relevant Supplemental Shelf Prospectuses.

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ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE UNDERSTANDING RATINGS SECTION OF THIS SITE.

ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE UNDERSTANDING RATINGS SECTION OF THIS SITE.

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