Fitch Ratings has affirmed Access Bank Plc's Long-Term Issuer Default Rating (IDR) at 'B' with a Stable Outlook.

It has has also affirmed Access Bank's Viability Rating (VR) at 'b' and National Long-Term Rating at 'A+(nga)'.

According to Fitch, Access Bank's Long-Term IDR is driven by its standalone creditworthiness, as expressed by its VR.

The VR factors in a leading franchise, healthy loan quality and strong revenue diversification, profitability and liquidity coverage. It also reflects the constraint of a challenging operating environment, aggressive cross-border growth and moderate capitalisation in the context of its risk profile.

Access Bank's National Long-Term Rating, the ratings agency said, balances its leading franchise and strong financial profile against weaker capitalisation than higher-rated peers'.

It also stressed that Access Bank is Nigeria's largest banking group, accounting for 19% of banking system assets at end-2021.

“Access Bank has acquired several banks in other Sub-Saharan African countries in recent years in line with its African expansion strategy.”

Fitch thus expects such acquisitions to continue, strengthening Access Bank's franchise and geographical diversification.

Significant Credit Concentrations

Fitch said the bank’s single-obligor credit concentration is high, with the 20-largest loans representing 207% of Fitch Core Capital (FCC) at end-2021.

Oil and gas exposure (24% of gross loans at end-2021) is material but lower than other domestic systemically important banks'.

Its sovereign exposure through fixed-income securities and cash reserves at the Central Bank of Nigeria is particularly high relative to FCC (exceeding 450% at end-2021).

Improved Loan Quality

Access Bank's impaired loans ratio declined to 4.3% at end-quarter 1 2022, from 6% at end-2019, largely reflecting problem loans inherited through the Diamond Bank acquisition in 2019 being addressed through write-offs and restructurings.

Though remaining material, Stage 2 loans have similarly declined to 9.8% of gross loans at end-2021, from 31% at end-2019.

Strong Profitability

Fitch also saidAccess Bank delivered strong profitability, as indicated by operating returns on risk-weighted assets that have averaged 3.5% over the past four years.

The strong profitability is supported by a wide net interest margin, strong non-interest income and moderate loan impairment charges.