Moody’s Changes 2020 Outlook For Nigerian Banks To Negative

By Emmanuel Aziken, Editor

Moody’s has changed the 2020 outlook for Nigerian banks from stable to negative reflecting what the international rating agency said is their weakening operating environment.

The Moody’s report obtained by GWG referencing 2020 outlook for the continent also downgraded the outlook to negative from stable for banks in South Africa, Tunisia and Angola.

The three countries with Nigeria according to Moody’s face the greatest challenges in the coming year.

Banks in Egypt, Morocco, Mauritius and Kenya, Moody’s said will be more resilient.

“The global economy remains sluggish with negative business sentiment and trade uncertainty clouding growth prospects. In Africa, government debt is high and GDP growth will remain below potential and insufficient to boost per capital income levels or increase economic resilience,” Moody’s said in a statement.

“Weakening operating conditions are pressuring governments’ credit quality leading to a knock-on effect on banks through reduced business generation, slower credit growth and rising asset risk,” said Constantinos Kypreos, Senior Vice President at Moody’s.

For Nigeria, Moody’s cited major challenges that they face in 2020 to include sluggish growth of the economy at 2.5% which it said will not engender enough robust confidence to improve living standards.

Despite declining reports on Non-Performing Loans, NPLs, Moody’s said the problems of bad loans are still masked by the banks saying that the problem are bound to erupt in 2020.

Another factor localized to Nigeria according to Moody’s is that bank earnings would be constrained by issues including rising personnel costs, AMCON levy, IT investments among others.

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