The parent companies of Zenith Bank Gambia Limited and Guaranty Trust Bank Gambia Limited have been rated top in Fitch's Viability Rating (VR) reflecting strong domestic franchises and resilient performance.
In a special report on Nigeria banking sector published on 30 July, the rating agency said GTBank and Zenith in Nigeria were at the top with VRs of 'b+'.
"The VRs of these banks reflect strong domestic franchises and resilient performance through the cycle. The VRs also take account of lower than average concentration risk for the sector and acceptable levels of capitalization," the report says.
While First Bank had a 'b' VR, Access Bank, Diamond Bank and UBA had 'b-' ratings with Union Bank having a 'ccc' VR.
The rating agency explained that "First Bank previously had significant credit concentrations, particularly with one large problematic exposure, which was the main constraining driver of its VR at 'b-'. Asset Management Corporation of Nigeria (AMCON) purchased this and other problem loans during 2011, substantially improving First Bank's standalone position.
"The upgrade of First Bank's VR to 'b' reflects the AMCON intervention which has substantially reduced balance sheet concentrations. In addition, First Bank VR reflects acceptable asset quality and Fitch Core Capital ratio and a leading domestic franchise, controlling about 15 per cent of system assets at end of 2011."
Fitch noted that the banks in the 'b-' range were characterised by poor financial performance; higher than average credit concentrations for the sector; loan growth higher than the rapid sector average; weak loan loss reserve coverage of non-performing loans (NPLs) and low levels of Fitch Core Capital.
It explained further that Union Bank's 'ccc' rating reflects "its status as one of the rescued banks, having operated with negative equity since late 2009.
The upgrade to the VR acknowledges the injection of capital by AMCON and a private equity consortium following the acquisition of the bank by Union Global Partners Limited (African Capital Alliance Consortium)."