Global credit rating agency, Moody’s has confirmed Access Bank’s long-term local currency deposit rating of B2, long-term foreign currency deposit rating of B3, long-term issuer ratings of B2, local currency senior unsecured rating of B2, local currency national scale deposit ratings of A1.ng/NG-1, foreign currency national scale deposit ratings of A3.ng/NG-2, and national scale senior unsecured rating of A1.ng.
Moody’s also affirmed Access Bank’s short-term bank deposit ratings, issuer ratings and counterparty risk ratings (CRR) at Not-prime and affirmed the short-term counterparty risk assessment (CRA) at Not-prime(cr). The outlook on the bank’s long-term deposit ratings, long-term issuer ratings and senior unsecured rating was changed to stable from ratings under review.
It also downgraded Access’ baseline credit assessment (BCA) to b3 from b2, its long-term CRRs to B2 from B1, long-term CRA to B2(cr) from B1(cr), and national scale CRRs to Aa3.ng from Aa1.ng.
The BCA is a measure of the probability that a bank will require support to avoid default beyond the support provided by its affiliates.
Diamond Bank’s baseline credit assessment was upgraded to b3 from caa3 and all Diamond’s ratings have been aligned with the ratings of Access. The outlook on Diamond’s long-term deposit and issuer ratings was changed to stable from ratings under review. Diamond’s ratings were subsequently withdrawn. This withdrawal was sequel to the announcement by Access that Diamond’s assets, liabilities, and undertakings have now been assumed by Access.
According to Moody’s report, Access Bank’s’ funding profile will benefit from Diamond’s large retail deposit base.
“As of September 2018, about 75 percent of Diamond’s deposits were inexpensive retail deposits while Access has a higher reliance on more confidence-sensitive corporate deposits,” Moody’s said in the report.
The rating agency expects the cost of deposits for Access to lower by 100-150 basis points in the next 18 months, which will support the bank’s net interest margins. Additionally, in the long-term, the acquisition will enhance Access’ profitability through a broadened product offering and efficiency savings relating to branch network, workforce, procurement and support and IT services.
OLUFIKAYO OWOEYE
