S.African agency affirms financier EADB credit rating

Global Credit Ratings (GCR) has affirmed the long-term and short-term national scale ratings assigned to East African Development Bank (EADB) of AA+ (UG), (KE), (TZ), (RW).

The South African-based agency also accorded the regional lender a stable outlook, besides affirming its foreign currency international scale rating of BB+.

The GCR ratings come a few months after Moody’s affirmed the lender’s Baa3 long-term issuer rating.

Both GCR and Moody’s ratings are expected to boost the bank’s chances of attracting on-lending funds from local and international lenders.

“A significant increase in scale, shareholder capacity, and funding diversification, together with maintenance of strong asset quality, liquidity and capital metrics, may have a positive impact on the ratings. However, the ratings would be sensitive to further deterioration in asset quality, evidence of a deterioration in the quality of governance, and or declining shareholder capacity and or willingness to support the bank,” GCR said.

EADB is owned by member states of the East African Community (EAC) of Kenya, Uganda, Tanzania and Rwanda, with a stake of 87.3 per cent as at the end of 2016.

READ: Moody’s retains lender EADB’s credit rating

African Development Bank (AfDB) hold most of the remaining shares – through its 8.8 per cent shareholding, callable capital, technical assistance and funding lines.

GCR said the bank is well capitalised for current risk levels with a capital to asset ratio of 63.7 per cent in 2016.

Total capital and reserves grew by 5.1 per cent to Sh25.8 billion in 2016, mainly driven by member contributions $4.6 million (Sh473.8 million) and earnings retention $7 million (Sh721 million).