African Bank, the "good bank" salvaged from African
Bank Investments Limited (Abil), had the rating of its rand-denominated
bonds upgraded to BB from BB- and its outlook raised to stable from
negative by S&P Global Ratings on Wednesday night.
The bank, which was separated from Abil and its not part of the renamed African Phoenix, which resumed trading on the JSE in February, had markedly improved its capitalisation and had a significantly stronger balance sheet, S&P said.
But the credit rating agency’s note listed a number of problems African Bank still faced after coming out of business rescue.
"African Bank has a diminished franchise, resulting from the failure of its predecessor and a monoline business model that compares unfavourably with that of domestic banking sector peers. Management is attempting to diversify revenues (and funding) and produce greater underlying initiatives by improving its product offering to its clientele and establishing long-term commercial partnerships," S&P said.
The ratings agency warned its outlook on African Bank could revert back to negative if SA’s "economic or credit environment weakens, possibly through increased unemployment, higher inflation and interest rates, or deteriorating rule of law and corruption".
African Bank’s foreign-denominated bond rating was affirmed at B+/B, also with the improved stable outlook.
The bank, which was separated from Abil and its not part of the renamed African Phoenix, which resumed trading on the JSE in February, had markedly improved its capitalisation and had a significantly stronger balance sheet, S&P said.
But the credit rating agency’s note listed a number of problems African Bank still faced after coming out of business rescue.
"African Bank has a diminished franchise, resulting from the failure of its predecessor and a monoline business model that compares unfavourably with that of domestic banking sector peers. Management is attempting to diversify revenues (and funding) and produce greater underlying initiatives by improving its product offering to its clientele and establishing long-term commercial partnerships," S&P said.
The ratings agency warned its outlook on African Bank could revert back to negative if SA’s "economic or credit environment weakens, possibly through increased unemployment, higher inflation and interest rates, or deteriorating rule of law and corruption".
No comments:
Post a Comment