GCR places the long and short-term national scale ratings of Atlas Mara Zambia Limited on Ratings Watch Negative.
Johannesburg, 05 February 2019 – Atlas Mara Zambia Limited’s national scale ratings of BB(ZM) and B(ZM) in the long term and short term respectively have been placed on Ratings Watch Negative.
SUMMARY RATING RATIONALE
The ratings have been placed on Ratings Watch Negative to reflect the close proximity of the bank to a key asset quality covenant. We are in the process of gathering more information and we hope to resolve the Ratings Watch Negative within the next seven days.
NATIONAL SCALE RATINGS HISTORY | ||
Initial/ last rating (February 2018) | ||
Long-term: BB(ZM); Short term: B(ZM) | ||
Outlook: Evolving |
ANALYTICAL CONTACTS
Primary Analyst | Secondary Analyst | |
Vimbai Muhwati | Victor Matsilele | |
Credit Analyst | Junior Credit Analyst | |
(011) 784-1771 | (011) 784-1771 | |
.(JavaScript must be enabled to view this email address) | .(JavaScript must be enabled to view this email address) | |
Committee Chairperson | ||
Matthew Pirnie | ||
Sector Head: Financial Institutions | ||
(011) 784-1771 | ||
.(JavaScript must be enabled to view this email address) |
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Criteria for Rating Banks and Other Financial Institutions (March 2017)
BancABC Zambia rating reports (2005-18)
RATING LIMITATIONS AND DISCLAIMERS
ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: http://GLOBALRATINGS.NET/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: http://GLOBALRATINGS.NET/RATINGS-INFO. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT http://GLOBALRATINGS.NET.
GLOSSARY OF TERMS/ACRONYMS USED IN THIS DOCUMENT AS PER GCR’S FINANCIAL INSTITUTIONS GLOSSARY
Arrears | An overdue debt, liability or obligation. An account is said to be ‘in arrears’ if one or more payments have been missed in transactions where regular payments are contractually required. |
Asset | A resource with economic value that a company owns or controls with the expectation that it will provide future benefit. |
Asset Quality | Refers primarily to the credit quality of a bank’s earning assets, the bulk of which comprises its loan portfolio, but will also include its investment portfolio as well as off balance sheet items. Quality in this context means the degree to which the loans that the bank has extended are performing (ie, being paid back in accordance with their terms) and the likelihood that they will continue to perform. |
Budget | Financial plan that serves as an estimate of future cost, revenues or both. |
Capital | The sum of money that is invested to generate proceeds. |
Financial Institution | An entity that focuses on dealing with financial transactions, such as investments, loans and deposits. |
Financial Statements | Presentation of financial data including balance sheets, income statements and statements of cash flow, or any supporting statement that is intended to communicate an entity’s financial position at a point in time. |
Interest | Scheduled payments made to a creditor in return for the use of borrowed money. The size of the payments will be determined by the interest rate, the amount borrowed or principal and the duration of the loan. |
National Scale Rating | Provides a relative measure of creditworthiness for rated entities only within the country concerned. Under this rating scale, a ‘AAA’ long term national scale rating will typically be assigned to the lowest relative risk within that country, which in most cases will be the sovereign state. |
Past Due | Any note or other time instrument of indebtedness that has not been paid on the due date. |
Performing Loan | A loan is said to be performing if the borrower is paying the interest on it on a timely basis. |
Provision | The amount set aside or deducted from operating income to cover expected or identified loan losses. |
Regulatory Capital | The total of primary, secondary and tertiary capital. |
Risk | The chance of future uncertainty (i.e. deviation from expected earnings or an expected outcome) that will have an impact on objectives. |
Security | An asset deposited or pledged as a guarantee of the fulfilment of an undertaking or the repayment of a loan, to be forfeited in case of default. |
Short-Term | Current; ordinarily less than one year. |
Short-Term Rating | An opinion of an issuer’s ability to meet all financial obligations over the upcoming 12-month period, including interest payments and debt redemptions. |
For a detailed glossary of terms please click here
SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the ratings were influenced by any other business activities of the credit rating agency; b.) the ratings were based solely on the merits of the rated entity, security or financial instrument being rated; and c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument.
Atlas Mara Zambia participated in the rating process via, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit ratings have been disclosed to Atlas Mara Zambia Limited, and were amended following an appeal.
The information received from Atlas Mara Zambia and other reliable third parties to accord the credit rating included:
• Audited financial results of Africa Banking Corporation Zambia at 31 December 2017 (plus three years of comparative numbers);
• Unaudited management accounts of Atlas Mara Zambia as at 30 September 2018;
• Corporate governance and enterprise risk framework;
• Reserving methodologies and capital management policy;
• Industry comparative data and regulatory framework; and
• A breakdown of facilities available and related counterparties.
The ratings above were solicited by, or on behalf of, Atlas Mara Zambia, and therefore, GCR has been compensated for the provision of the ratings.