Moody's Investors Service has assigned first-time long term global scale local-currency bank deposit and issuer ratings of B2 to First City Monument Bank Limited (NGSE:FCMB) and Fidelity Bank Plc (NGSE:FIDELITYBK), and long term B3 global scale local-currency bank deposit and issuer ratings to Diamond Bank Plc (NGSE:DIAMONDBNK). The three mid-tier Nigerian banks account for approximately 12% of the country's banking assets. Moody's also assigned local currency bank deposit national scale ratings (NSRs) of A2.ng to FCMB and Fidelity and A3.ng to Diamond. A full list of the banks' ratings is at the end of this press release.
The primary drivers of our assessment of the banks' standalone credit profiles are their robust loss-absorbing buffers, above our global average for similarly rated peers, and their resilient local currency liquidity buffers. These strengths, however, are moderated by the challenging operating environment in Nigeria, as the oil and gas dependent economy slowly recovers from its 2016 recession. Nigeria's challenging operating environment is reflected in our 'Very Weak +' macro profile score for Nigeria (the complete Nigerian macro profile is available on www.moodys.com).
Moody's also incorporates one notch of rating uplift, based on a high probability of government support, from the banks' Baseline Credit Assessments (BCA) of b3 for FCMB and Fidelity and caa1 for Diamond. The B2 local-currency deposit and issuer ratings assigned to FCMB and Fidelity are aligned with the ratings of the Nigerian government.
For FCMB and Fidelity, Moody's has assigned a stable outlook on long-term global scale bank deposit and issuer ratings. The stable outlooks reflect our expectations that over the next 18 months credit costs associated with the banks' loan portfolio will be absorbed by pre-provision profits and that overall, these banks' credit fundamentals will continue to remain in line with peers at the B2 rating level.
For Diamond, Moody's has assigned a positive outlook on its long-term global scale bank deposit and issuer ratings. Diamond's positive outlook reflects our expectation that elevated asset risks will decline this year on account of the resolution of some of its past due loans that have not been impaired. It also reflects our view that the ongoing deleveraging of the bank will improve the bank's funding profile and support capital.
