International credit ratings agency Moody’s has assigned a Ba1 foreign currency rating for PTA Bank, reflecting the pan-African lender’s “strong liquidity position.”
Moody’s said the bank, which has two corporate bonds listed at the Nairobi Securities Exchange, has “strengthening capitalisation levels and improving risk management policies and practices.”
“The rating also reflects the bank’s shareholders’ limited ability to provide callable capital and relatively weak asset quality.”
PTA Bank has two outstanding bonds at the NSE, a seven-year Sh800 million bond floated in 2005 and another seven-year Sh600 million bond floated in 2008.
The annual credit report says the rating is the culmination of the restructuring programme which began in 2003.
Part of PTA Bank’s strategic plan was to achieve Sh84 billion ($1 billion) in assets by 2012 from $350 million in 2006, a target it achieved in 2010.
By the end of last year the bank’s net assets had grown to $1.37 billion.
During the time PTA Bank was to lower Non-performing loans (NPL) but Moody’s says that the bad debts are yet to reach a tolerable level relative to its peers.
“Although the latter have been declining continuously following the bank’s 2000-03 restructuring programme, they are still relatively high (4.7 per cent) compared with that of other Multilateral Development Banks (MDBs).
This is, however, lower than the 60 per cent NPL rate of 1999 which gradually dropped to 18.7 per cent in 2006.
The report however says the bank still has room to improve its financial position. The mix of the bank’s shareholders for example means that capitalisation calls are not as efficient as they would be for peer lenders.