Fitch Ratings today announced one-notch downgrades to the credit ratings of FirstRand Bank Holdings Limited (from BBB+ to BBB) and FirstRand Bank Limited (from A- to BBB+). The rating action was as a result of the increased risk in global and local financial markets and the deteriorating credit conditions currently being experienced by the South African banking sector.
Fitch’s rating for FirstRand Bank Limited (FRB) is now in line with the ratings assigned to FRB by Moody’s and Standard & Poor's, and places FRB’s rating on a par with South Africa’s BBB+ sovereign rating.
The bad debt experience has been in line with our peers and our expectations given the increased interest rates and other inflationary pressures impacting the consumer. Furthermore we have cautioned that the bad debt cycle in South Africa is only likely to peak over the next year provided that there are no significant increases in interest rates.
Sizwe Nxasana, CEO of the FirstRand Banking Group, said that, "Given current macro economic conditions it was not surprising that FirstRand Bank's rating should reflect the country's sovereign rating. FRB is in a sound position to ride out the current cycle and prosper when conditions improve.”