11th May 2016 06:34
LONDON (Alliance News) - Moody's Investors Service late Tuesday confirmed the Baa2 long-term deposit ratings of the five largest South African banks: Standard Bank of South Africa, FirstRand Bank Ltd, ABSA Bank Ltd, Nedbank Ltd, and Investec Bank Ltd.
The ratings agency also confirmed Standard Bank Group's Baa3 issuer rating, while downgrading Absa Bank's baseline credit assessment to baa3 from baa2.
That concludes the review for downgrade on the banks' ratings that was initiated on March 10, Moody's said. The confirmation of the banks' ratings was driven primarily by Moody's prior decision to confirm South Africa's sovereign rating at Baa2 last week, alleviating the pressure on the banks' credit profiles due to their sizable holdings of sovereign debt securities that link their creditworthiness to that of the national government.
Moody's took into account also that it expects the banks to generally show resilience in their financial performance despite the current economic slowdown in South Africa.
"The negative outlook assigned to all five South African banks takes into account the negative outlook assigned to the sovereign rating and the impairment risks that the banks will continue to face over the next 12-18 months given the difficult operating environment," Moody's said.
Nedbank is a subsidiary of London-listed Old Mutual PLC, while Investec Bank is part of London-listed Investec PLC. Absa Bank is part of Barclays Africa Group Ltd, in which Barclays PLC currently owns a 50.1% stake after its recent placing of shares in the group.
By Samuel Agini; [email protected]; @samuelagini
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