Fitch downgrades Ecobank Nigeria’s viability score to ‘f’

Credit score rankings company Fitch Rankings has downgraded Ecobank Nigeria’s viability score to ‘f’ from ‘ccc.’

A viability score assesses a monetary establishment’s intrinsic creditworthiness, together with its standalone power and capability to climate financial downturns.

The downgrade of the viability score to ‘f’ “displays Fitch’s view that the financial institution has suffered a fabric capital shortfall, with its complete capital adequacy ratio (CAR) being in breach of the ten% regulatory requirement since 2024 regardless of intensive regulatory forbearance,” the organisation mentioned in a score motion commentary on Tuesday.

“Fitch believes ENG might want to strengthen capitalisation by extraordinary capital assist or might want to proceed working with regulatory forbearance relating to its materials capital shortfall attributable to its weak profitability and intensely excessive credit score concentrations and downside loans,” it added.

Fitch, nonetheless, affirmed the long-term issuer default score (IDR) of Ecobank Nigeria at ‘CCC.’ An extended-term IDR measures an entity’s relative vulnerability to default on its long-term monetary obligations. A ‘CCC’ score signifies substantial credit score threat.

In June, S&P World Rankings lowered the financial institution’s long-term IDR to ‘CCC-‘ from ‘CCC’.

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The company said that it anticipated Ecobank Nigeria to pursue further measures to strengthen its capital adequacy, similar to issuing further $150 million in further Tier 1 (AT1) devices.

“If the financial institution receives the capital injection from its mum or dad throughout the subsequent couple of months, we anticipate that it’ll now not be in breach of the minimal CAR,” S&P World Rankings mentioned on the time.

On 9 July, Ecobank Transnational Included, the mum or dad firm, introduced the launch of $250 million AT1 qualifying devices through a non-public placement of contingent convertible notes.

Fitch additionally lowered Ecobank Nigeria’s shareholder assist score (SSR) to ‘no assist’ from ‘f’. An SSR signifies the potential of an entity receiving extraordinary assist from its shareholders within the occasion of monetary misery.

It famous that the affirmation of the long-term IDR regardless of the VR and SSR downgrades signifies the rankings company’s view that default threat has not materially elevated.

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The organisation warned that default stays an actual risk, contemplating the numerous capital shortfall and the chance of deposit withdrawals given the financial institution’s modest foreign-currency liquidity.

“Nonetheless, regardless of these dangers, Fitch believes the financial institution has adequate liquidity to proceed servicing its obligations, together with the remaining USD150 million Eurobond cost due in February 2026,” Fitch said.