Fitch lowers Bank of Industry rating from B+ to B

One of the international rating agencies, Fitch Ratings, has lowered the rating of the Nigerian-based Bank of Industry (BOI) from B+ to B category.

In the agency’s latest report published on Wednesday, it stated that the negative assessment of the bank’s Long-Term Issuer Default Rating (IDR) from B+ to B was a function of many factors, including its ability or otherwise in sourcing funds outside the state’s support.

“Fitch does not assign a Viability Rating to BOI as its business model to government-run organs because they are entirely dependent on the support of their states,” the report says.

Following recent revision of Nigeria’s outlook to Negative, by most rating agencies in their separate reports in January 2017, it is not expected that most financial institutions in the country would fair better, said officials.

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Other details about the rating shows that BoI would have performed better within the period covered by the assessment, but for its failure to have impacted well on Nigeria’s drive towards enhancing startups and small and medium-sized enterprises through which to boost its down economy.

The bank’s IDRs are driven by its Support Rating Floor (SRF) of ‘B+’, which reflected a limited probability of sovereign support.

The SRF factors in BOI are 99.9 per cent state ownership, policy role and strategic importance to Nigeria’s economic and industrial development.

It also reflects the authorities’ stronger ability to support BOI than for commercial banks, as BOI’s operations are almost entirely in local currency.

BOI’s funding is long-term and almost exclusively sourced from the CBN, which mirrors on the sovereign rating of Nigeria.

The rating actions runs this way: BoI Long-Term IDR affirmed at ‘B+’, was put at ‘AA+ in 2010.

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