…South Africa and Morocco also changed to negative
MON, APRIL 27 2020-theG&BJournal- Moody’s Investors Service has changed to negative from stable the banking system outlook on Nigeria in the light of the corònavirus pandemic and oil price slump.
Moody’s said today that Nigerian banks will face weakening loan quality and foreign-currency liquidity as low as oil prices and the pandemic weigh on the economy.
‘’These new challenges add to the existing headwinds from slow economic growth and rising regulatory cost,’’ Moody’s said. ‘’Banks’ exposure to the oil and gas industry is substantial, at around 27% of total loans at the end of 2019, making the system susceptible to the oil price slump.’’
Moody’s noted that the banking system is also highly dollarized, putting pressure on both assets and liabilities in the event of a naira devaluation. It said that Nigeria’s largest banks, however, will continue to benefit from high government support.
South Africa and Morocco banking systems outlooks were also changed to negative, and Moody’s said ‘’in these three countries the outbreak will cause bank’s asset quality to deteriorate and will put pressure on profitability, while slowing economic growth.’’
In South Africa the outbreak will exacerbate the already challenging operating environment and will weaken the credit worthiness of banks over the next 12 to 18 months hurting loan performance and profitability, and severely hampering business growth.
An in Morocco, Moody’s said the outbreak will weigh on growth and adds to the problems of low rainfalls that is hurting the agriculture sector.
‘’The impact will be partly offset by lower energy import prices, given that Morocco is an oil importer. We expect problem loans to rise due to borrower concentrations, with significant exposure to SMEs in Morocco and Sub-Saharan African Countries.’’
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