The Global Credit Rating Company has affirmed an upgraded national scale short term rating to A2 (KE) from previous rating A3 (KE) and a national scale long term rating of BBB (KE) and from the Global Credit Rating Company.
The ratings, valid until October 2015, are supported by the bank’s moderate business and financial risk profile, growth in business, efficiency in balance sheet, commencement of non-performing loans recovery, cost control as well as success in the private bond issue in May this year.
The bank released a Ksh. 650 million private bond with a green shoe option of Ksh. 350 million. With 5.25 years tenure and a yield of 12.6 percent, the bond was oversubscribed by 57 percent.
The upgrade of the bank’s short term rating is a reflection of the positive operational changes in the business, including the enhanced funding profile of the bank and the potential internal growth. Appropriate deployment of capital/funding, improving profitability while maintaining credit protection factors, the diversification of income streams and a reduction in funding costs on the back of the retail strategy may have a positive impact on the bank’s long-term rating going forward.
‘’We are excited about the new rating. It positions the bank as a safe and stable investment vehicle for investors, as it is a stamp of financial soundness, with a minimal risk of insolvency’’ noted ABC Bank Group Managing Director Shamaz Savani.
Leveraging its strengths in asset finance, trade finance and international and local remittance solutions, the bank has carved out a niche by providing focused services and solutions to mid-to-large sized corporate firms. More recently, however, the bank has expanded its client profile to include all market segments.
‘’ This good rating assures investors of the fundamentals of our business, its actual strength, financial standing, and management details, giving them the confidence in taking investment decisions’’ added Savani.
Following a successful realignment of its business model in line with its five year (2013- 2017) strategy, the bank created five strategic business segments, namely: Corporate Banking, Retail Banking, SME Banking, Treasury, and Alternative Channels.