A leading global rating agency, Standard and Poor’s, has assigned (B/stable/B) to Skye Bank Plc in its latest rating.
S&P said it based its rating of the bank on Nigeria’s positive economic prospects which will support Skye Bank’s earnings growth, capitalisation and asset quality over the next 12 to 18 months.
Standard and Poor’s rationalised Skye Bank’s stable rating on the bank’s modest, but profitable franchise, operating in the mid-tier of the nation’s highly competitive banking sector.
The rating agency is anticipating that Skye Bank’s RAC ratio will remain between 5.5 per cent and six per cent over the next 12 months, reflecting robust internal capital generation and mild risk-asset accumulation.
“We could lower the ratings if the bank failed to maintain a risk-adjusted capital ratio above five per cent over the next 12 months”, S&P said.
“We also expect that Skye Bank will maintain non-performing loans at about 3.5 per cent of total loans, a cost of risk of about 2.5 per cent and a loan-loss coverage ratio in excess of 90% of NPLs over the next 12 months”, S&P said, while stating that the bank was largely funded by stable customer deposits and sizable portfolio of liquid assets.
The agency noted that Skye Bank had a modest, mid-tier position in Nigeria’s increasingly competitive banking sector, pointing out that in 2013,it reported total assets of N1.4tn, ranking it the eighth-largest bank in Nigeria by lending.
Also, it said its rating was based on the lender’s strategy of focusing on expanding its retail and commercial (largely SME) franchise, while leveraging its branch network and electronic platforms to mobilise low-cost retail deposits.
Skye Bank has returned a negative 29% in the last one year. Their pretax profits for the first 6 months of this year also dropped 31%.
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