CREDITWORTHINESS
Fitch lowers ratings of five local banks
The ratings agency revises the issuer default ratings on Absa Bank, FirstRand Bank, Investec Bank, Nedbank and Standard Bank
Fitch Ratings has revised its view of the creditworthiness of five banking groups, as well as utility Eskom and mobile provider MTN, in line with its downgrade of SA’s local and foreign currency debt last week. The ratings agency changed the issuer default ratings on Absa Bank, FirstRand Bank, Investec Bank, Nedbank and Standard Bank to BB+, the first rung in the junk basket. It also downgraded the ratings of their respective holding companies, except that of the FirstRand group, to the same notch. This matches its rating on SA government debt. "The deterioration in sovereign creditworthiness brings increased risks to the banking sector," said Fitch analyst Andrew Parkinson. "Higher borrowing costs for the sovereign will translate into further pressure on economic growth, which is likely to result in deterioration of banks’ financial metrics." He said asset quality, funding and liquidity were among the metrics affected by its move on SA’s sovereign ratings and that it would have to ...
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