Nigeria’s main ratings Agency Agusto & co. has upgraded the country’s banking sector ratings by one notch to “BBB” from “BB” citing a stable outlook, improved earnings and capital ratios.
Nigerian lenders staged a sharp recovery during the first half of the year, after some banks sold bad loans worth over N1.5 trillion to AMCON, freeing up their balance sheets and focusing more on creating risk assets.
The agency said non-performing loans declined to N328 billion representing 4.8 per cent of loans in 2011, compared with an impaired loan ratio of 16 per cent in 2010.
Two weeks ago, global ratings agency Fitch said Nigerian banks continued to face challenges despite AMCON’s support and that credit had grown rapidly by 30-66 per cent in 2011.
It said lenders had thin levels of “core capital”.