Jacobson Pharma Forms Joint Venture with Kin Fung Weisen-U

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Jacobson Pharma Forms Joint Venture with Kin Fung Weisen-U

Expands Branded Product Portfolio and Develops New Markets for Gastrointestinal and Respiratory Products

 

HONG KONG, CHINA – Media OutReach – 31 October 2019 – Jacobson Pharma
Corporation Limited (“Jacobson Pharma” or the  “Company”; Stock Code: 2633), a leading company
engaging in the research, development, production, marketing and sale of
generic drugs and proprietary medicines, announced today that its wholly-owned subsidiary Smiley Sun Limited (“Smiley”) has signed a
joint venture agreement (the “JV Agreement”) with Kin Fung Weisen-U
Company Limited (“Kin Fung Weisen-U”) to set up a new company (the “Joint Venture”)
which will be 50%-owned respectively by Smiley and Kin Fung Weisen-U.

 

The Joint Venture
will distribute and sell certain products of Kin Fung Weisen-U, including the
well-recognised gastrointestinal drug “Weisen-U” (「胃仙-U」) and the popular
nasal spray brand “Flucur Nebuliser” (「呼佳噴霧劑」) to new markets in the Asia Pacific region. It will
create an expanded proprietary medicine platform for the Group in support of
its regional market development strategy.

 

The Joint Venture
will also explore and develop respective product line extensions for Weisen-U (「胃仙-U」) and Po Chai
Pills (「保濟丸」). Furthermore, it will
explore and conduct businesses relating to the supply and distribution of
non-prescription drugs as well as food/health supplements of the gastrointestinal
and respiratory categories in markets worldwide. In particular, the Joint Venture
will have the first right over Smiley and Kin Fung Weisen-U to acquire brands of gastrointestinal and respiratory drugs, and
food/health supplements. The Joint Venture will allow the Group to strengthen
presence and penetration in the OTC market segment.

 

With Kin Fung Weisen-U being a
long-standing reputable player in the pharmaceutical industry, Jacobson Pharma believes
the Joint Venture will give the Company a sound strategic leverage to broaden
its portfolio of gastrointestinal and respiratory drugs, food/health
supplements and also to speed up expansion in the Asia Pacific market.

About Jacobson Pharma Corporation Limited (雅各臣科研製藥有限公司；Stock Code: 2633)

Jacobson Pharma is the largest generic drug company in Hong Kong with
over 30% share of the total generic drug market. The Group’s proprietary
medicines, notably being Po Chai Pills (「保濟丸」), Ho Chai
Kung Tji Thung San (「何濟公止痛退熱散」), Contractubex Scar Gel (「秀碧除疤膏」) , Flying Eagle Wood Lok Medicated Oil (「飛鷹活絡油」), Tong Tai Chung Woodlok Oil (「唐太宗活絡油」), Doan’s Ointment (「兜安氏藥膏」), Saplingtan (「十靈丹」), Shiling Oil (「十靈油」) and Col-gan Tablet (「傷風克」) have been widely recognised by the market.
The Group also enriches its portfolio through in-house development or in-licensing
of high value-added products covering sterile injections, oncology products,
combination drugs, specialty medicines, as well as orphan drugs and
biosimilars. To support its fast growing business, the Group is currently
operating business offices established in China, Macau, Taiwan, Singapore and
Cambodia apart from Hong Kong, giving it a regional market platform for tapping
the high growing market potential in the Asia Pacific and Greater China
regions. Jacobson Pharma has been a constituent stock of MSCI Hong Kong Micro Cap Index since 1
June 2017. For more details about Jacobson Pharma, please visit the Group’s
website: http://www.jacobsonpharma.com

About Kin Fung Weisen-U Company Limited

Kin Fung Weisen-U was incorporated in Hong Kong in 1960s and is principally
engaged in the development of gastrointestinal and respiratory pharmaceutical
drugs. Kin Fung Weisen-U is the brand owner and sole agent of Weisen-U (「胃仙-U」) in Hong Kong, Macau and the PRC. Starting from January 2019,
Jean-Marie Pharmacal Co. Ltd., a wholly-owned drugs manufacturing subsidiary of
Jacobson Pharma Corporation Limited, whereas its production facilities have
been PIC/S (Pharmaceutical Inspection Co-operation Scheme) GMP accredited, has become
the contract manufacturer of Weisen-U (「胃仙-U」) for Kin Fung Weisen-U.

China Zhongwang’s Revenue Increases by 14% to RMB18.7 Billion in the First Nine Months of 2019

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China Zhongwang’s Revenue Increases by 14% to RMB18.7 Billion in the First Nine Months of 2019

Results
Highlights:

  • Sales volume
    and revenue in the first nine months of 2019 recorded double-digit growth
  • Aluminium extrusion business grew organically, rapidly
    expanding the aluminium alloy formwork leasing business
  • Production
    capacity of aluminium flat rolling business continued on the rise, doubled the
    revenue and productivity

 

Financial Highlights:

RMB million

For the nine months

ended 30 September

2019

2018

Change YoY

Sales volume (tonnes)

759,153

572,821

+32.5%

 

Revenue

18,650

16,357

+14.0%

 

Gross profit

5,419

5,264

+3.0%

 

Net profit

2,220

2,509

-11.5%

 

HONG KONG, CHINA – Media
OutReach – 31 October 2019 – China Zhongwang
Holdings Limited (“China Zhongwang” or the “Company”, together with its
subsidiaries the “Group”, stock code: 01333), a world-leading fabricated
aluminium products developer and manufacturer, announced its unaudited
consolidated results for the nine months ended 30 September 2019 (“the Period
under Review”). During the Period under Review, the production efficiency of aluminium extrusion products and aluminium flat rolling products continued to rise, propelling the Group’s sales volume to increase by 32.5% to 760,000 tonnes. The total revenue grew 14.0% to RMB18.7 billion. Gross profit was up by 3.0% to RMB5.42 billion, with a gross profit margin of 29.1%. Net profit was RMB2.22 billion.

 

Mr. Lu Changqing, Chairman and President of China Zhongwang, said, “To support the sustainable
development of the Group’s businesses, we have been exploring the feasibility
of various business models for the last few years. In mid 2019, the Group
commenced the leasing business of aluminium alloy formwork, which provided the
Group with direct access to the end market and promoted light-weight solutions
for green construction . At the same time, the production capacity of the
aluminium flat rolling business continued to expand, constantly driving up the
production efficiency to bring positive impact to the Group’s sales volume.”

 

Boosted Promotion of Aluminium Alloy Formwork Leasing Business

During the Period under
Review, the Group persisted in promoting the leasing business of aluminium
alloy formwork. Compared with the aluminium alloy formwork sales business, the
aluminium alloy formwork leasing business has a higher gross profit margin and
profit margin. In the medium and long term, the leasing of aluminium alloy
formwork can create a recurring income source and contribute to a higher profit.
After a few months of operation, the Group has gained a deeper understanding of
the key factors in the execution and has made improvements in various stages,
including production, assembly, transportation, warehousing, application,
maintenance, and retrieval process. The aim was to raise the efficiency and
leverage the advantage of the leasing model. In addition, the Group’s
capability to produce a comprehensive range of aluminium formwork that includes
supporting components and connectors has been developing according to schedule.
By unlocking the potential of aluminium formwork’s applied usage, it can become
the long-term growth engine for the Group.

 

Productivity of Aluminium Flat Rolling Further Unleashed

The Group continued to explore
the market for aluminium flat-rolled products. During the Period under Review,
aluminium flat-rolled products contributed the biggest proportion to the
Group’s sales volume. Benefitting from the persistent increase in efficiency,
the sales volume of flat-rolled products in the first nine months of 2019
doubled. At present, the Group produces premium flat-rolled products for
industrial customers and in the fields of new energy vehicles and green
packaging. Once the Group receives certification for premium products such as automotive
body sheets, its product portfolio will be fully upgraded and profitability
enhanced. The Group’s second production line has commenced small-volume pilot
production.

 

Looking ahead, Mr.
Lu said, “China is speeding up its high-quality development of the economy,
the aluminium fabrication industry has been attracting an unprecedented level
of attention, boosting our confidence in the prospects of aluminium’s applied
use. The Group will keep on optimising its production capacity and diversifying
its product portfolio. We will maintain our focus on product research and
development and innovation, in order to make our contribution to the
sustainable development of the society.”

About China Zhongwang Holdings Limited

China Zhongwang is the second largest industrial
aluminium extruded products developer and manufacturer in the world and the
largest in Asia. The Group provides a myriad of quality fabricated aluminium
products and offers integrated light-weight solutions for such downstream
sectors and fields as ecological construction, transportation, machinery and
equipment and electric power engineering.

 

With shared resources, the Group’s core businesses,
namely industrial aluminium extrusion, aluminium flat rolling and further
fabrication have achieved synergistic development. In 2017, the Group expanded
its business presence in the transportation sector by acquiring Aluminiumwerk
Unna AG., a leading aluminium extrusion manufacturer, and Silver Yachts Ltd., a
large-scale all-aluminium superyacht builder, tapping into the end-use
manufacturing in the marine sector as well. Having built excellent teams of
research and development, technology and design, the Group is able to provide
one-stop light-weight solutions covering independent design, manufacturing,
fabrication and after-sales services. Looking ahead to the future, the Group
will continue to promote the applications of high-end fabricated aluminium
products, aiming to offer light-weight solutions to the society so that people
can live a quality life with low energy consumption.

 

For further information on the Group, please
visit our official website at www.zhongwang.com.

Zenith Bank Earnings Update 9M-19: Rapidly driving e-banking volumes

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Zenith Bank Earnings Update 9M-19: Rapidly driving e-banking volumes

Zenith Bank Plc (“ZENITH”) released its 9M-19 results earlier, showing a 3.5%y/y growth in Gross Earnings (GE) to N491.3bn. Also, PBT and PAT increased by 5.3% and 4.5% to N176.2bn and N150.7bn respectively. Expansion in loan book (at 9.2% to N2.7tn) was faster than Customer deposits growth, which rose 7.1% to N3.95trn. We update our estimates for the bank and we review our expectations below.

Electronic Banking fee up 100% in 12 months: ZENITH’s GE growth was weak at 3.5%y/y to N491.3bn, no thanks to interest income which fell 5.1%y/y to N321.9bn amid lower earnings yield. Although net loans and advances grew 9.2%YTD, interest income on loans fell 18.2% to N175.2bn while interest income from other funding sources added 17.4%. Elsewhere, interest expense fell 2.9% to N107.3bn (which translates into a lower Cost-of-Funds at 2.95%) but was not enough to halt a 6.1% decline in Net Interest Income to N214.6bn. As such, Net-Interest Margin declined from 9.0% to 8.7%. Contrary to the poor outing for Interest Income, Non-Interest Income (NII) rebounded strongly in 2019, surging 21.8% to N156.8bn amid solid inflow from electronic banking fee which doubled to N35.3bn vs. N17.7bn. Impairment charges also printed a 27.3% increase, driving Cost of Risk (COR) to 1.2% from 0.9% in the prior period.

In terms of Operating Expenses (OPEX), ZENITH’s was able to keep OPEX at bay, rising 0.8% to N176.9bn. Thus, the Cost to Income ratio (CIR) slowed to 50.1% (vs. 51.2% in the prior period). Accordingly, the profit margins remained very attractive as PBT and PAT came in at N176.2bn and N150.7bn, with net margin at 30.7% while 12month trailing ROE settled at 23.7%.

Solid Capital and Liquidity position: ZENITH’s huge cash balance and relatively low Loans-to-Deposits ratio (LDR) made headline in Sept-19 when the CBN debited the Bank a total of N135.6bn due to failure to meet the Apex Bank’s minimum total funding to credits ratio of 60.0% as at Sept-19 ending. Clearly, the action of the CBN was supported by a review of the balance sheet position which shows LDR at 55.8% as liquidity ratio stood at 63.8%. However, NPL ratio remained below the 5.0% threshold at 4.95%, while Capital Adequacy Ratio (CAR) stood at 23.8%. With recent pronouncement by the CBN, we highlight the 9.2% expansion in the bank’s loan book to N2.2tn. With an updated pronouncement by the CBN for banks to maintain a minimum of 65.0% LDR, we expect efforts to further grow credit to intensify going forward.

Stable cost profile and profit margins restate a BUY rating: Our views on ZENITH remain positive, buoyed by efficient cost-to-operating revenue profile and stable margins. Although interest income is unlikely to improve by FY-19, stronger NII performance, cheaper funding cost and stable CIR are expected to keep profitability attractive. For context, PAT is expected to close the year around N200.0bn, again in 2019. Also, low CoR at 1.2% and NPL ratio of 4.95%, buttress our position as this implies that asset quality will remain stable. As noted above, recent regulation will compel the bank to further expand credit, hence we expect some traction in this regards. Finally, at the current price, the dividend yield is estimated at 14.7%, making the stock very attractive at the current price. The bank trades at a P/B ratio of 0.6x, less than 1.2x for GUARANTY. Again, with ROE of 23.8%, the ticker remains under-priced at N17.0. Accordingly, we maintain a BUY rating on the ticker.

Sources: Company Financials, United Capital Research

United Capital Research

FBN Holding Plc Earnings 9M-9: …heading for a single-digit NPL ratio

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FBN Holding Plc Earnings 9M-9: …heading for a single-digit NPL ratio

Earlier, FBN Holding Plc (“FBNH” or “The Bank”) released its 9M-19 results, showing a -0.4%y/y decline in Gross Earnings (GE) to N439.9bn. The Bank’s flattish topline can be attributed to sustained pressure on interest income which fell 3.0%y/y to N327.5bn amid hesitant loan growth and poor yields on interest-bearing assets. PBT and PAT, however, continued to rebound, up 16.9%y/y and 15.3%y/y to N60.0bn and N51.8bn respectively. We review the 9M earnings and adjust our expectations for FY-19 below.

Powering back to profitability: FBNH’s gross earning was flattish, reflecting the impact of the hesitant position of the bank to expand its loan book (up 1.5% YTD) amid weaker earnings yield. Notably, while the deployment of funds to investment securities decreased 9.7%, interest income on investment securities surged 12.2% to N1342.6bn. On the contrary, interest income on loans fell 8.9%y/y to N184.6bn. Although Interest expense remained unchanged at N116.0bn, Net Interest Income fell 4.6%y/y to N211.4bn on the back of weaker interest income. Thus, NIM settled at 7.3%. Additionally, Non-Interest Income reported modest growth, rising 6.0% to N98.6bn on the back of sustained uptrend in electronic banking fee, but not strong enough to buoy gross earnings of the bank. Notably, loan loss expense continues to fall sharply, down 62.6% to N28.5bn (vs N76.2bn in the prior year) as the bank complete its efforts to restructure its balance sheet. As at H1-19, management highlighted that the Atlantic energy loan which accounts for the largest portion of the NPL is fully written-off. Nonetheless, Cost-to-Income ratio jumped to 71.5% as OPEX surged 18.4% (vs. weak income growth). Overall, the improvement in loan loss expense buoyed bottom line numbers as PBT and PAT rose 16.9% and 15.3% y/y to N60.0bn and N51.8bn respectively. As such, net margin and ROE improved to 11.8% and 18.3% (vs. 10.2% and 14.8%) respectively.

Asset Quality improves on Atlantic Energy NPL Write-Off: Compared to 25.9% Dec-2018, NPL ratio fell sharply to 14.5% in H1-19 as the bank reported that it has completed the write-off of the Atlantic Energy loan. As of 9M-2019, NPL ratio is on course to hit the Bank’s single-digit NPL target at 12.6%. Nevertheless, Loan to Deposit ratio came below the CBN’s minimum threshold for both FBN Ltd and FBN Merchant Bank, both of whom were penalized by the CBN – to the tune of N77.4bn– for failure to meet the 60.0% target. We imagine that effort to boost LDR towards the new minimum threshold of 65% will drive up loan book marginally by year-end.

BUY rating retained as asset quality improves: Although Revenue growth remains
unaspiring, our outlook for FBNH going forward is more positive following the full write-off of the Atlantic Energy Loan. We expect this to boost the bottom-line significantly by a full year. Also, improvement in profitability margins is projected to drive up ROE to about 20% by a full year, thus, increasing the earnings and dividend yield outlook for the bank. We estimate the dividend yield for FY-2019 at 4.9%. Yet, we note that management must check rising OPEX which continues to pressure cost to income ratio above peer average. Given the foregoing, views on FBNH is broadly positive. At its current price of N5.3/share, the bank seems to be trading at a discount to peers. This is as its PB & PE ratios settled 0.3x and 3.3x compared to peer (tier-1) average 0.6x and 2.8x respectively. As such, we retain our BUY rating on FBNH.

Sources: Company Financials, United Capital Research

United Capital Research

Coscharis Motors Launches The New Ford Edge Into The Nigerian Market

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Coscharis Motors Launches The New Ford Edge Into The Nigerian Market
  • Coscharis launches the new Ford Edge into the Nigerian Market
  • New 2019 Ford Edge is defined by modern sophistication
  • New Edge reduces fuel consumption during stop-and-go city driving
  • A new class standard Ford Co-Pilot360™ – a suite of standard features to help you drive with confidence

LAGOS, Nigeria, 30 October 2019 – Coscharis Motors Plc, a leading automobile dealership and exclusive dealer of Ford in Nigeria has launched the new Ford Edge into the Nigerian market. The launch took place at the ongoing 20th Abuja International Motor Fair in Abuja on October 30, amidst pomp and pageantry.

Speaking during the launch, Abiona Babarinde, General Manager Marketing and Corporate Communications at Coscharis Group said, “Ford has continued to thrill the world with enhanced new products born out of deep-rooted research into the desires of automobile consumers around the globe. We at Coscharis will always see to it that our market never misses the opportunity to get its fair share of such highly innovative products.”

Abiona described the new 2019 Ford Edge as “an upscale sport utility vehicle (SUV) defined by modern sophistication.”

Concluding his speech during the launch, Abiona said, “With this launch today, Coscharis has once again enlarged the coast for SUV vehicles and increased the options for our customers to choose from a wide range of Ford SUVs, including Expedition, Explorer, Escape, EcoSport and now, the new Edge.”

There are plenty of smart new features in the New Ford Edge which stands it out in its class. Starting with Ford Co-Pilot360™, a suite of standard driver-assist technologies designed to help you confidently navigate your world. You will also find a smooth-shifting rotary gearshift dial that puts you in control of the 8-speed automatic transmission. Also, there is a wireless charging pad that makes recharging your mobile phone hassle-free. Music lovers are not left behind as the new Edge now has available B&O Sound System with 12 high-performance speakers.

Stop-start-go

Experience quick-shifting 8-speed automatic transmission and standard Auto-Start/Stop technology, which reduces fuel consumption during stop-and-go city driving. You’ll find these drive enhancement features in both of the EcoBoost engines which are available in the new 2019 EDGE. Ford’s SelectShift® capability enhances your driving experience on the all-wheel-drive (AWD) new EDGE derivatives with racing-inspired paddle shifters.

A NEW CLASS STANDARD. FORD CO-PILOT360™

All it takes is a few seconds to lose focus, according to the National Highway Traffic Safety Administration (NHTSA), 94% of serious crashes are due to human error. To help you drive with confidence, the new 2019 EDGE comes with Ford Co-Pilot360™. This suite of 5 standard features start helping the moment you begin backing out of your driveway

Rear-View Camera with Washer shows you what’s behind the new EDGE as you slowly back up. When it gets dirty, spray it clean with the touch of a button.

BLIS® (Blind Spot Information System) with Cross-Traffic Alert warns you if it detects a vehicle in either of your blind spots while attempting to change lanes, or approaching from either side while in Reverse.

Pre-Collision Assist with Automatic Emergency Braking can automatically apply the brakes to help reduce the severity of, and in some cases potentially eliminate, a frontal collision with a vehicle travelling in the same direction, or a pedestrian detected ahead.

Lane-Keeping System alerts you with steering wheel vibration if it detects you drifting out of your lane, and can even apply steering wheel torque to help direct you to return to your lane.

Auto High-Beam Headlamps can help detect vehicles and street lights ahead of you, automatically switching between low and high beams as a convenience to you, and a courtesy to other motorists.

FORD CO-PILOT360 ASSIST+™

When your new EDGE is equipped with Ford Co-Pilot360 Assist+, you’ll also benefit from these additional technologies.

Adaptive Cruise Control with Stop-and-Go and Lane Centering can bring your vehicle to a complete stop when traffic slows and can accelerate back to its preset speed within 3 seconds. Lane Centering reads the lane markings to help you keep your new EDGE centred in its lane.

Evasive Steering Assist, also part of the package, helps avoid a collision with a stopped vehicle ahead by providing steering support when a collision can’t be avoided by braking alone.

SYNC®3. STAY CONNECTED ON THE MOVE.

It all starts here. This vibrant 8” touchscreen is the command centre of SYNC®3 voice-activated technology, which integrates your paired mobile phone with the new EDGE as soon as you start your vehicle. Make calls. Send and receive text messages. And so much more. Just swipe left or right, or use simple voice commands, to help ensure that your life doesn’t miss a beat. SYNC®3 also features 2 smart-charging USB ports to help keep your devices powered up.

Link Your Apps

SYNC®3 AppLink® links your favourite compatible mobile apps with your voice, giving you convenient control. iPhone® users can view the Waze™ app’s community-based navigation and traffic features on the large SYNC®3 touchscreen CONNECT YOUR iPHONE Apple CarPlay™ compatibility displays the iPhone interface on your vehicle’s touchscreen. Send and receive text messages by voice. Get directions. Access playlists from Apple Music®. Just ask Siri® for help. She already knows your voice.

Connect Your iPhone

Apple CarPlay™ compatibility displays the iPhone interface on your vehicle’s touchscreen. Send and receive text messages by voice. Get directions. Access playlists from Apple MusicR. Just ask SiriR for help. She already knows your voice.

Connect Your Android Phone

Android Auto™ compatibility displays the Android™ interface on your vehicle’s touchscreen.

Get voice-guided navigation from Google Maps™ and Waze™. Access your favourite music from your apps. Make calls. Send and receive messages. Just talk to Google Assistant™ and go.

Map Your Route

Voice-activated navigation delivers turn-by-turn directions and vivid 3-D maps on the SYNC®3 touchscreens. The pinch-to-zoom capability allows for a closer look.

Style and function meet to make perfection

From the Intelligent Access key fob that gets you into the push-button start that gets you going, the new EDGE interior has it all. Experience true control: Check out the new rotary gearshift dial in the centre console, a new wireless charging pad and B&O Sound System. No doubt you’ll find every aspect of the interior is designed to indulge, pamper and please you.

Maximize space – never compromise on comfort

With its rear 60:40 split seat folded flat, the new EDGE converts to a cargo haulier with ease. A convenient EasyFold® seat release for the rear seat lets you maximize cargo space with the touch of a button. Fold both sides of the seatback down for large objects. Or leave one side up to carry cargo and passengers side by side. And if your hands are full as you approach the rear liftgate, just kick your foot under the rear bumper. The hands-free foot-activated liftgate will rise on its own. This new EDGE is as versatile as you are.

PUSH START AND GO IN THE NEW EDGE AMBIENTE

Assert your presence wherever you go in the Ambiente. Boasting Ford Co-Pilot360™, all-new EDGE derivatives are equipped with a standard suite of driver-assist technologies like Intelligent Access to get you in, Push-Button Start to get your engine going, and the new rotary gearshift dial to make it happen.

Upfront, Ambiente exhibits the freshened fascia, wider grille and redesigned hood of the new

EDGE that helps it cast a more planted stance on the road. Outside, low- and high-beam bi-LED headlamps illuminate your view, 18” Sparkle Silver-painted Aluminum wheels fill the wells for a solid finish, and the 4-wheel disc Anti-Lock Braking System (ABS) helps bring them to a halt.

STAY SHARP – LEAD IN THE TREND

A long list of Trend standards includes: Dual-Zone Electronic Automatic Temperature Control, SYNC®3, LED fog lamps, 10-way power-adjustable driver’s seat, 6-way power-adjustable front-passenger seat, leather-wrapped steering wheel, and Reverse Sensing System.

LUXURY YOU CAN SEE AND FEEL – TITANIUM

Add refinement to your driving experience in the well-appointed Titanium which offers the ultraconvenient hands-free foot-activated liftgate, a new 12-speaker B&O Sound System; new wireless charging pad; 10-way power-adjustable, heated, leather-trimmed driver and front-passenger seats, SYNC®3 and more.

Fitch Affirms United Bank for Africa PLC at ‘B+’; Outlook Stable

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Fitch Affirms United Bank for Africa PLC at ‘B+’; Outlook Stable

London – 29 October 2019: Fitch Ratings has affirmed the United Bank for Africa PLC’s (UBA) Long-Term Issuer Default Rating (IDR) at ‘B+’. The Outlook is Stable. A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS

IDRs, VIABILITY RATING AND NATIONAL RATINGS

The IDRs of UBA are driven by its standalone creditworthiness, as expressed by its ‘b+’ Viability Rating (VR). UBA’s VR is highly influenced by Nigeria’s operating environment, with weak macroeconomic conditions, policy uncertainty and regulatory intervention constraining the bank’s standalone creditworthiness.

UBA’s VR also reflects a strong franchise in Nigeria, as highlighted by market shares and a sizeable retail and current and savings accounts (CASA) deposit base, which translates into pricing power over smaller peers. UBA’s overall franchise is strengthened by a network of 19 subsidiaries across Sub-Saharan African (SSA) countries outside of Nigeria, which positions the bank to serve corporate customers operating across the continent and capitalise on trade flows. Operations across the rest of Africa (28% of assets at end-1H19; 41% of net income in 2018) provide a valuable source of diversification, particularly given the small contribution of each country.

Execution on strategy has been particularly strong, as highlighted by exceptional retail deposit growth, increasing earnings contributions from the rest of Africa business and generally strong financial performance during challenging economic conditions.

Loan quality remains weak. UBA’s impaired (Stage 3 under IFRS 9) loans ratio (5.6% at end-1H19) is low relative to the sector average, but a large stock of Stage 2 loans (24% of gross loans at end-1H19) that are concentrated by single-borrower and derive from troubled sectors such as power and oil and gas, present a risk to UBA’s financial profile. Specific loan loss coverage of impaired loans is low (30% at end-1H19) and compares poorly with other large banks’. This is influenced by particularly weak provisioning against impaired loans to bulk oil distribution companies in Ghana (48% of impaired loans at end-1H19), which are expected to be repaid as part of a government framework. Single-borrower concentration is high, with UBA’s 20-largest loans representing 136% of Fitch Core Capital (FCC) at end-1H19.

UBA consistently produces strong profitability metrics. Strong profitability is supported by a wide net interest margin that benefits from a low cost of funding but is flattered by weak provisioning of impaired and Stage 2 loans. However, the impact of currency translation of foreign operations on other comprehensive income can be large, as highlighted in recent years.

Capitalisation is a rating strength. Regulatory capital metrics display significant buffers over the regulatory minima. UBA’s FCC ratio (31% at end-1H19) is exceptionally high, influenced by a small loan book and financial collateral on lending, which both serve to reduce the bank’s risk-weight density, but leverage is higher than at certain other large banks. Net impaired loans measured at just 5% of FCC at end-1H19, but this should be considered in view of weak specific coverage of Stage 3 loans and a large stock of lowly-provisioned Stage 2 loans, which have the potential to compromise solvency.

Naira liquidity is a rating strength. UBA’s low loans/customer deposits ratio (50% at end-1H19) is reflective of a particular liquid balance sheet, withholdings of liquid assets being large enough to comfortably cover short-term liquidity gaps. Funding stability is supported by a sizeable CASA (73% of customer deposits at end-1H19) deposit and retail deposit base (52% of customer deposits at end-1H19) and only moderate single-depositor concentration. Growth in retail deposits has been particularly strong in recent periods, serving to strengthen the stability of UBA’s funding profile. US dollar liquidity appears only adequate in view of high single-depositor concentration in US dollar.

UBA’s National Ratings reflect Fitch’s view of the bank’s relative creditworthiness within Nigeria.

SUPPORT RATING AND SUPPORT RATING FLOOR

Fitch believes that sovereign support to Nigerian banks cannot be relied on given Nigeria’s weak ability to provide support, particularly in foreign currency. In addition, there are no clear messages of support from the authorities regarding their willingness to support the banking system. Therefore, the Support Rating Floor of all Nigerian banks is ‘No Floor’ and all Support Ratings are ‘5’. This reflects our view that senior creditors cannot rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable.

SENIOR DEBT

UBA’s senior unsecured debt is rated in line with the bank’s Long-Term IDR, given that the likelihood of default on these notes reflects the likelihood of default of the bank. Fitch assigns a Recovery Rating (RR) of ‘RR4’ to this issue, reflecting average recovery prospects.

RATING SENSITIVITIES

IDRs, VIABILITY RATINGS AND NATIONAL RATINGS

UBA’s Long-Term IDR, VR and National Ratings are sensitive to deterioration in asset quality, including migration of Stage 2 loans into the Stage 3 category, which would lead to a knock-on effect on profitability and solvency. UBA’s ratings are also sensitive to a downgrade of Nigeria’s sovereign rating.

SENIOR DEBT

UBA’s senior unsecured debt is sensitive to a change in UBA’s Long-Term IDR.

SUPPORT RATING AND SUPPORT RATING FLOOR

The SR and SRF are sensitive to a change in assumptions around the propensity or ability of the sovereign to provide timely support to the bank.

ESG CONSIDERATIONS

The highest level of environmental, social and governance (ESG) credit relevance for UBA is a score of 3. This means ESG issues are credit-neutral or have only a minimal impact on the entity, either due to their nature or to the way in which they are being managed by the entity.

RATING ACTIONS
ENTITY/DEBT RATING RECOVERY PRIOR
HIDE RATING ACTIONS
United Bank For Africa Plc
LT IDR
B+
Affirmed
 B+
ST IDR
B
Affirmed
 B
Natl LT
AA-(nga)
Affirmed
 AA-(nga)
Natl ST
F1+(nga)
Affirmed
 F1+(nga)
Viability
b+
Affirmed
 b+
Support
5
Affirmed
 5
Support Floor
NF
Affirmed
 NF
senior unsecured
LT
B+
Affirmed
 RR4 B+

Fitch Affirms Bank of Industry at ‘B+’; Outlook Stable

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Fitch Affirms Bank of Industry at ‘B+’; Outlook Stable

London-29 October 2019: Fitch Ratings has affirmed Nigeria-based Bank of Industry Limited’s (BOI) Long-Term Issuer Default Rating (IDR) at ‘B+’. The Outlook for the IDR is Stable. A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS

IDRS, SUPPORT RATING, SUPPORT RATING FLOOR AND NATIONAL RATINGS

BOI is a state-owned development bank and its Long-Term IDR is equalised with the Nigerian sovereign rating (B+/Stable) and driven by its Support Rating Floor (SRF) of ‘B+’, which reflects a limited probability of support from the Nigerian sovereign if required. The SRF considers BOI’s 99.9% state ownership, policy role and strategic importance to Nigeria’s economic and industrial development. The Stable Outlook on BOI’s Long-term IDR mirrors the Outlook on the sovereign.

BOI’s funding is long-term and sourced from the Central Bank of Nigeria and leading multilateral development banks (MDB) – the African Development Bank (AAA/Stable) and African Export-Import Bank (BBB-/Stable). Loans provided by these MDBs are guaranteed by the Nigerian state.

BOI’s strong capital ratios are prudent given the bank’s sensitivity to the volatile economic environment. As part of its budget allocation, the government has committed NGN10 billion of new capital to BOI each year from 2019. Dividend payouts are fairly low.

Profitability is not a key objective but the government requires the bank to be financially sustainable. BOI reported net income of NGN32.5 billion for 2018. BOI continues to generate good net interest margins owing to its low cost of funding and reasonable overall performance metrics, supported by fairly low loan impairment charges.

Fitch does not assign a Viability Rating to BOI, similar to our practice for other development banks. This is because it’s business model is entirely dependent on the support of the state and, in our view, its unique policy role cannot be carried out on a commercial basis.

RATING SENSITIVITIES

IDRS, SUPPORT RATING, SUPPORT RATING FLOOR AND NATIONAL RATINGS

BOI’s IDRs, Support Rating and SRF are sensitive to changes in Nigeria’s sovereign ratings. The bank’s ratings are also sensitive to a reduced propensity of the authorities to support the bank. This could be indicated by a change in BOI’s policy role, such as a shift into commercial activities, or a material reduction in government ownership. We have no reason to believe such changes are likely in the foreseeable future.

BOI’s National Ratings are sensitive to a change in Fitch’s opinion of BOI’s creditworthiness relative to other credits in Nigeria.

The rating actions are as follows:

Long-Term IDR affirmed at ‘B+’, Outlook Stable
Short-Term IDR affirmed at ‘B’
National Long-Term Rating affirmed at ‘AA+(nga)’
National Short-Term Rating affirmed at ‘F1+(nga)’
Support Rating affirmed at ‘4’
Support Rating Floor affirmed at ‘B+’

Fitch Affirms Stanbic IBTC Bank at ‘AAA(nga)’

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Fitch Affirms Stanbic IBTC Bank at ‘AAA(nga)’

London – 29 October 2019: Fitch Ratings has affirmed the National Long-Term Ratings of Stanbic IBTC Bank PLC (SIBTC) and its non-operating holding company, Stanbic IBTC Holding Company PLC (SIBTCH), at ‘AAA(nga)’ and National Short-Term Ratings at ‘F1+(nga)’. A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS

NATIONAL RATINGS AND SENIOR DEBT

The ratings of SIBTC and SIBTCH are based on potential support from their ultimate parent, South Africa’s Standard Bank Group (SBG; BB+/Negative), which owns 65.9% of SIBTCH (which in turn owns 100% of SIBTC).

The National Ratings reflect SBG’s ability to support the subsidiaries and the group’s willingness to do so. The ability to support considers SBG’s ‘BB+’ Long-Term IDR as well as Nigeria’s Country Ceiling of ‘B+’.

Fitch believes that SBG’s willingness to support the group’s Nigerian subsidiaries is high. Factors considered include SIBTCH’s and SIBTC’s role in the group as SBG’s main operations in West Africa, the ownership size and high operational integration. Fitch believes that SBG’s support if needed, would extend equally to the bank and the holding company.

SIBTCH is the holding company for SBG’s Nigerian operations. Its main operating entity SIBTC, a mid-tier bank with a leading corporate and investment banking franchise, forms 96% of the holding company’s assets.

Fitch has also affirmed the National Long-Term Ratings on SIBTC’s NGN30 billion senior unsecured notes and the National Long and Short-Term Ratings on the NGN150 billion structured note programme for senior unsecured debt.

RATING SENSITIVITIES

NATIONAL RATINGS AND SENIOR DEBT

Given Nigeria’s Country Ceiling of ‘B+’, SIBTCH’s and SIBTC’s National Ratings could withstand up to a two-notch downgrade of SBG’s ‘BB+’ Long-Term Foreign-Currency IDR before they would be affected. Downside risk to the ratings could also stem from a decline in SBG’s willingness or ability to provide support, or from a change in SBG’s stake, resulting in a loss of control.

A downgrade of Nigeria is unlikely to result in a downgrade of SIBTCH’s or SIBTC’s National Ratings.

The ratings on the senior notes and programme are sensitive to changes in SIBTC’s National Long-and Short-Term Ratings.

RATING ACTIONS
ENTITY/DEBT RATING PRIOR
HIDE RATING ACTIONS
Stanbic IBTC Holdings PLC
Natl LT
AAA(nga)
Affirmed
 AAA(nga)
Natl ST
F1+(nga)
Affirmed
 F1+(nga)
Stanbic IBTC Bank PLC
Natl LT
AAA(nga)
Affirmed
 AAA(nga)
Natl ST
F1+(nga)
Affirmed
 F1+(nga)
senior unsecured
Natl LT
AAA(nga)
Affirmed
 AAA(nga)
senior unsecured
Natl ST
F1+(nga)
Affirmed
 F1+(nga)

Fitch Affirms Access Bank at ‘B’; Stable Outlook

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Fitch Affirms Access Bank at ‘B’; Stable Outlook

London-29 October 2019: Fitch Ratings has affirmed Access Bank Plc’s (Access) Long-Term Issuer Default Rating (IDR) at ‘B’ with a Stable Outlook. The Viability Rating (VR) is also affirmed at ‘b’. A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS

IDRS, VR, NATIONAL RATINGS AND SENIOR DEBT RATINGS

The IDRs, National Ratings and senior debt ratings of Access are driven by its intrinsic creditworthiness, as defined by its VR. Like all Nigerian banks, Access’ VR is constrained by the operating environment in Nigeria, which has a high influence on the rating. Nigeria’s sovereign rating is ‘B+’ with Stable Outlook.

The acquisition of Diamond Bank (Diamond) on 31 March 2019 increased Access’ consolidated assets by around 30% and created Nigeria’s largest bank, with a 23% share of deposits (previously 11%). Following the acquisition, Access’ traditional corporate business model is more balanced across retail and SME segments. Management’s objectives are to pursue a retail-focused, digitally-driven, growth strategy and position the bank as a regional leader in Africa. If achieved, this will boost Access’ profile, but factors such as franchise, business model and strategic objectives currently have only a moderate influence on the bank’s ratings.

Diamond’s asset quality was weak but management is successfully executing on a plan to write off impaired loans and focus on recoveries. The impaired (Stage 3) loans/gross loans ratio, which had exceeded 10% immediately following Diamond’s acquisition, fell back to 6.8% at end-June 2019. This is broadly in line with ratios displayed by the most highly rated Nigerian banks (around 7%) but Access’ share of Stage 2 loans as a proportion of gross loans is still fairly high at around 20%. Total loan loss coverage of Stage 3 loans is high at 112% (49% immediately post-acquisition), but specific coverage of Stage 2 loans is still low.

Access’ risk culture is strong. The bank’s risk management tools, culture and controls are being implemented across the Diamond network, which we view positively but it will take time to assess whether asset quality problems at Diamond have been fully addressed.

Access’ Fitch Core Capital (FCC)/risk-weighted assets ratio, 18% at end-June 2019, is still below the 28% average reported by its closest peers. Access’ ability to generate earnings is considerable and regulatory capital ratios have been strengthened through subordinated debt issuance, but this is not included in our calculation of FCC.

Performance metrics achieved so far in 2019 are sound. Net interest margin improved to 7.3% in 1H19, largely as a result of lower funding costs reflecting the inflow of cheaper retail and SME deposits, which are proving to be stable. The bank’s cost-to-income ratio (65%) is still high compared with the 50% average reported by more efficient peers, but identified synergy savings are considerable and efficiency improvements should feed through over the next few years.

Access’ funding profile improved following the Diamond merger and the outlook for the bank’s funding and liquidity metrics is positive. Liquidity coverage for short-term liabilities in foreign currency and naira is prudent. Diamond’s USD200 million bond was repaid at end-May 2019 and Access redeemed USD400 million of subordinated notes in June 2019. Repayment of Access’ outstanding USD300 million Eurobond is not due until October 2021 and the bank’s foreign-currency liquidity position is comfortable, with US dollar cash and equivalents covering around 40% of foreign-currency deposits at end-June 2019.

Access’ National Ratings reflect the bank’s creditworthiness relative to other issuers in Nigeria.

SUBORDINATED DEBT

Access’ NGN30 billion subordinated bonds are rated one notch below the bank’s National Long-Term Rating. This reflects higher loss-severity relative to senior unsecured instruments, reflecting their subordinated status. No additional notching is ascribed for non-performance risk as we regard this to be minimal relative to that captured by Access’ National Long-Term Rating.

SUPPORT RATING AND SUPPORT RATING FLOOR

Fitch believes that sovereign support to Nigerian banks cannot be relied on given Nigeria’s weak ability to provide support, particularly in foreign currency. The Support Rating Floor of all Nigerian banks is ‘No Floor’ and all Support Ratings are ‘5’. This reflects our view that senior creditors cannot rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable.

RATING SENSITIVITIES

IDRS, VR, NATIONAL RATINGS

Access’ IDRs are sensitive to a change in the bank’s VR. National Ratings are sensitive to changes in Access’ credit risk relative to other Nigerian issuers which, in turn, could also be sensitive to a change in the bank’s VR.

The upside for the VR is sensitive to asset quality trends. Should Access’ Stage 3/gross loans ratio stabilise or improve, and should the Stage 2/gross loans ratio become more in line with ratios displayed by more highly rated peers, an upgrade of the VR is possible. The VR could also be upgraded if the benefits of the Diamond merger feed through to sustainable sound profitability trends, boosting internal capital generation. The downside to the VR is not envisaged at present but a material deterioration in the operating environment would likely negatively impact the VR.

SENIOR AND SUBORDINATED DEBT

A change in Access’ IDRs would lead to a change in the ratings of the bank’s senior debt obligations. The subordinated bond’s rating is sensitive to changes in Access’ National Long-Term Rating.

ENVIRONMENT, SOCIAL AND GOVERNANCE SCORES

The highest level of environmental, social and governance (ESG) credit relevance for Access is a score of 3. This means ESG issues are credit-neutral or have only a minimal impact on the entity, either due to their nature or to the way in which they are being managed by the entity.

Fitch Affirms Zenith Bank Plc at ‘B+’; Outlook Stable

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Fitch Affirms Zenith Bank Plc at ‘B+’; Outlook Stable

London-29 October 2019: Fitch Ratings has affirmed Nigeria-based Zenith Bank’s Long-Term Issuer Default Rating (IDR) at ‘B+’ with a Stable Outlook and Viability Rating (VR) at ‘b+’. A full list of rating actions is below.

KEY RATING DRIVERS

IDRs, NATIONAL RATINGS AND VR

Zenith’s Long and Short-term IDRs are driven by its standalone creditworthiness, as captured by its VR. Zenith’s VR is highly influenced by the domestic operating environment, reflecting weak GDP growth, policy uncertainty and increasing regulatory risks.

Zenith’s VR is among the highest assigned by Fitch to a Nigerian bank and reflects the bank’s well-entrenched domestic franchise and market share. Zenith is particularly strong in the prime corporate segment with a growing focus on retail banking. The bank’s franchise strength, management quality and clear strategy have allowed it to outperform peers through several cycles.

Zenith’s financial metrics are also strong compared with peers. Solid earnings generation and profitability (operating profit/risk-weighted assets of 7.1% in 1H19) reflect good margins, high levels of non-interest revenue and good cost control. Loan impairment charges have increased moderately and reflect some asset quality deterioration.

Zenith’s impaired loans/IFRS 9 Stage 3 ratio was 8.5% at end-1H19 (slightly up from 9.0% at end-2018) with loan loss allowance coverage at a comfortable 90%. Impaired loans rose in 2018 from consistently low levels due to a single large problem loan, highlighting the bank’s sensitivity to credit concentrations by obligor and industry. With recoveries and write-offs, our expectation is that the impaired loan ratio will start to decline by end-2020.

The bank’s high capitalisation is a rating strength, with a regulatory total capital adequacy ratio of 23.4% at end-1H19. This is comfortably above the minimum 15% regulatory requirement (excluding its DSIB buffer). Strong profitability and high levels of internal capital generation (dividend payout ratio of 50%) underpin capitalisation.

Zenith is primarily deposit funded and attracts low-cost corporate and institutional deposits. However, some of these deposits are also confidence and price-sensitive, particularly its foreign currency domiciliary deposits (end-1H19: 27% of total customer deposits). As one of Nigeria’s leading banks, Zenith has good access to market funding. In September 2019, the bank redeemed USD392.6 million of its USD500 million senior unsecured bond due 2022, partly because of its stronger liquidity position.

Zenith’s National Ratings reflect the bank’s strong creditworthiness relative to other issuers in Nigeria.

SENIOR DEBT

Senior debt issued by Zenith is rated at the same level as the bank’s IDRs because in our view, the likelihood of default on these notes reflects that of the bank. Where a bank has a Long-Term IDR of ‘B+’ or below, we usually assign a Recovery Rating (RR) to the issue. The RR assigned to these notes is ‘RR4’, indicating average recovery prospects.

SUPPORT RATING AND SUPPORT RATING FLOOR

Fitch believes that sovereign support to Nigerian banks cannot be relied on given Nigeria’s (B+/Stable) weak ability to provide support, particularly in foreign currency. Therefore, the Support Rating Floor of all Nigerian banks is ‘No Floor’ and all Support Ratings are ‘5’. This reflects our view that senior creditors cannot rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable.

RATING SENSITIVITIES

IDRS, SUPPORT RATINGS, NATIONAL RATINGS AND SENIOR DEBT

Zenith’s IDRs are sensitive to a rating action on the bank’s VR, which in turn is primarily sensitive to our assessment of the operating environment in Nigeria. This is because the bulk of the bank’s activities are concentrated in the domestic economy and there is a high correlation between sovereign and banking sector risks.

Zenith’s VR is also sensitive to the significant deterioration in its asset quality and a resultant weakening of its loss absorption capacity. However, this is not our base case. The upside to the ratings is limited given the operating environment.

Zenith’s National Ratings are sensitive to a change in the bank’s creditworthiness relative to other Nigerian banks.

The Support Rating and Support Rating Floor are sensitive to a change in assumptions around the propensity or ability of the sovereign to provide timely support to the bank. Given Nigeria’s sovereign ratings, this is not our base case.

Ratings on the senior debt will change in line with the bank’s IDRs.

ENVIRONMENT, SOCIAL AND GOVERNANCE SCORES

The highest level of environmental, social and governance (ESG) credit relevance for Zenith is a score of 3. ESG issues are credit-neutral or have only a minimal impact on the entity, either due to their nature or to the way in which they are being managed by the entity.

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