Lagos — Fitch, an international rating agency, has affirmed Stanbic IBTC Bank Plc.'s national long and short-term ratings at 'AAA(nga)' and 'F1+(nga)', respectively.

The national ratings, according to the agency, are based on the support the bank derives from Standard Bank Group Limited's (SBKJ.J: Quote) (SBG) majority ownership. They factored in the level of integration that has developed between Stanbic IBTC Bank and SBG, and SBG's written commitment in its 2008 annual report to support its banking subsidiaries.

SBG's main operating subsidiary is the Standard Bank of South Africa Limited ('BBB+'/'F2'/Outlook Stable).

Fitch considers that SBG's willingness to support Stanbic IBTC is high, although its ability to do so is moderate, given the transfer and convertibility risks associated with Nigeria's country ceiling of 'BB '.

During September 2007, SBG merged its Nigerian operations of Stanbic Bank (Nigeria) Limited with IBTC Chartered Bank Plc. and acquired a 50.1 per cent stake in the enlarged IBTC. SBG stated that this stake had increased to 50.7 per cent at the financial year 2008.

However, following the merger, SBG's group risk governance framework was introduced and since April 2008, the merged bank has been known as Stanbic IBTC.

The difficult operating environment caused the bank's net earnings for third quarter 2009 to decline to N3.7 billion against N10.6 billion recorded in the previous year, due to a 32 per cent increase in operating expenses and higher impairment charges following the Central Bank of Nigeria's special examination. Fitch expected that the Stanbic IBTC's earnings for 2009 full year end will be significantly lower than 2008 with the difficult operating environment continuing to negatively impact the bank's profitability into 2010.

Also the bank's gross loans fell by 20 per cent at the end of third quarter against the preceding year, mainly as a result of a decrease in margin facilities.

Meanwhile, with the completion of the CBN special examination, Stanbic IBTC's gross non-performing loans (NPL) increased to N20.7 billion, up from N15.5 billion at full year ended in 2008.

This resulted in the bank reporting a NPL ratio of 17.1 per cent at third quarter 2009, from 13.7 per cent recorded at the end of 2008 full year result.

Stanbic IBTC Bank which was established in 1989, is one of the nation's universal banks offering corporate and investment banking services, asset management, and private and retail banking services.