Sterling Bank’s shares gain 3.2% as Moody's reaffirms ratings

Moody’s Investors Service, a leading global

rating agency, has re-affirmed the resilience of

the Sterling Bank franchise by maintaining the

lender’s standalone Baseline Credit Assessment

(BCA) ratings of B3.

This cheery news came hours after the lender’s

share price appreciated by 3.25 per cent in

today’s trading on the Nigerian Stock Exchange

(NSE) to close at N1.59 per share, indicating

that that investors’ confidence remained strong.

BCAs are inputs to Moody's joint-default

analysis for ratings on issuers subject to

extraordinary government support. It measures

the financial strength of issuers subject to

extraordinary government support, which can

include banks, sub-sovereigns and government-

related corporate issuers (GRIs). It explicitly

excludes the likelihood of extraordinary

government support in the event that a bailout

is required, but does incorporate support as may

be necessary for ordinary operations.

The rating agency in a statement made available

to newsmen in Lagos, expressed confidence that

with its current profile, Sterling Bank will

remain resilient in the face of more challenging

operating conditions given its adequate capital

and liquidity buffers.

The agency in the statement explained, “Sterling

Bank’s B2 deposit ratings continue to

incorporate one notch of rating uplift on

account of government support as the Bank’s

ratings remain lower than the sovereign rating

and its foreign currency deposit rating is now in

line with the lowered foreign currency deposit

ceiling of B2”.

Specifically, Moody’s rated Sterling Bank b3 in

Adjusted Baseline Credit Assessment; B1 (cr) in

Long-Term Counterparty Risk Assessment; B2 in

Long-Term Issuer Rating (Local and Foreign

Currency); B2 in Long-Term Deposit Rating

(Local and Foreign Currency) while the outlook

changed to stable.

It would be recalled that the agency in a

statement last March, noted that the ratings

of the lender reflects its “solid asset quality

metrics and provision coverage, improvements to

its Information Technology (IT) infrastructure

and risk management processes as well as its

high liquidity buffers and a solid deposit funding

base”.

According to Moody’s, the primary driver for

confirming Sterling Bank’s BCAs is Moody’s

expectation of the resilience of the banks’

standalone credit profiles despite the challenging

operating environment. “While lower oil prices

will continue to exert pressure on corporate

borrowers and on the domestic economy more

generally, we expect any deterioration in asset

quality and liquidity at Sterling Bank to be

manageable and within the tolerance levels

assumed in their standalone ratings given their

capital and liquidity buffers”, the agency

stated.

Commenting, the Bank’s Executive Director,

Finance & Strategy, Mr. Abubakar Suleiman,

noted that the reaffirmation of the rating is a

testimony of the resilient of the Bank to remain

strong and professional despite the challenging

operating environment in which it operate.

Sterling Bank Plc, “the one-customer bank”, is a

full-service national commercial bank with an

asset base above N800 billion with over 187

business offices and more than 800 ATMs

nationwide. In over 55 years of service, Sterling

Bank (formerly NAL Bank) has evolved from the

nation’s pre-eminent investment banking

institution to a fully-fledged commercial bank.

Furthermore, with a strong national presence,

Sterling Bank is one of the top 30 most

capitalized institutions on the Nigerian Stock

Exchange. The bank also remains one of

Nigeria’s fastest growing banks and is

recognized as a dynamic financial services

organization.