First Bank gets Fitch’s B-rating, says board changes won’t affect profit, asset quality

first bank gets fitchs b rating says board changes wont affect profit asset quality

By Omodele Adigun

Despite its current ordeal, respite has come the way of FBN Holdings Plc (FBNH) and its subsidiary, First Bank of Nigeria Ltd (FBN,) as Fitch, an international credit rating agency, has affirmed both at “B-” with a negative outlook.

A ‘B’ rating indicates that “material default risk is present, but a limited margin of safety remains.”

This is a welcome development for the bank, which is struggling to recover from regulatory sanction occasioned by its aborted replacement of its Managing Director, Adesola Adeduntan.

In a statement released at the weekend, Fitch said the “impact of the CBN replacement of FBNH and FBN’s boards, the identification of corporate governance failings and the imposition of corrective measures are tolerable at the rating level.”

Fitch further said: “We have assessed the near-term financial impact of these actions on FBNH and FBN and believe this is tolerable at the rating level, even though the final outcome is uncertain. In our view, any remedial actions imposed by the CBN, including a potential reclassification of related-party exposures as impaired, will not have a material effect on the group’s asset quality, profitability and capitalisation.

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“However, this does not consider any possible additional actions by the CBN, especially if FBN fails to implement the regulator’s corrective measures or if there were any further uncovering of corporate governance irregularities.

“The outlook remains negative, reflecting FBNH’s pre-existing asset quality and capitalisation weaknesses as well as the group’s corporate governance weaknesses highlighted by the CBN. These could put pressure on the ratings.”

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