S & P rates GTBank BB- stable

By LAZARUS IBEABUCHI
ABUJA: Standard & Poor’s Ratings Services has rated Guarantee Trust Bank (GTBANK) Plc BB- with outlook stable.
S & P said the outlook on GTBANK reflects the stable economic environment, noting that the bank’s business and financial profiles will remain relatively unchanged over the next 12 months.
“In our view, the positive economic prospects in Nigeria will further support GTB’s business relationships and earnings capacity. We anticipate that GTB’s capitalization will increase slightly over the next 12-18 months owing to a strong earning capacity coming from high margins and low cost of risk. We also assume that GTB will maintain its stable funding and liquidity profile.
“We would raise the ratings on GTB if the bank’s sector and single-name concentrations were to reduce, as well as if its cost of risk becomes significantly lower than sector peers. An upgrade would also require the long-term foreign currency sovereign ratings to be raised.
“We could lower the ratings on GTB if its financial profile were to deteriorate significantly. Although unlikely, this could follow a sharp deterioration of asset quality or a change in risk appetite. A sovereign downgrade would trigger a downgrade of the bank,” the rating agency said.
Highlighting the bank’s strength, S & P disclosed that GTB has a strong franchise in top-tier corporate banking in Nigeria; capitalization supported by strong earningscapacity; diversified funding sources and strong liquidity indicators.
Meanwhile, high diversification and lending concentration in loan portfolio are the bank’s weaknesses economic and industry risk associated with operating in Nigeria, limited geographic and business, S & P said.
GTB’s rating came barely a week that the rating agency rated Zenith Bank Plc BB- with outlook stable also.
It said Zenith Bank, a leading top-tier bank, has strengths in its strong revenue growth, supporting adequate capitalization; a strong risk position underpinned by Zenith’s prudent underwriting standards and moderate loan growth target; as well as has stable core deposit base with strong liquidity indicators.

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