Rating Action: Moody’s affirms the long-term deposit ratings of two banks based in Democratic Republic of CongoGlobal Credit Research – 04 Mar 2021Outlook changed to positive from stable on the long-term bank deposit ratings of Rawbank, and the long-term local currency bank deposit rating of Equity BCDCLondon, 04 March 2021 — Moody’s Investors Service ("Moody’s") has today affirmed the Caa2 long-term bank deposit ratings of Rawbank S.A. (Rawbank) and the Caa1 long-term bank deposit ratings of Equity Banque Commerciale du Congo S.A. (Equity BCDC). Moody’s has changed the outlook to positive from stable on the long-term deposit ratings of Rawbank and the long-term local currency deposit rating of Equity BCDC, while maintaining the stable outlook on the long-term foreign currency deposit rating of Equity BCDC.Today’s rating actions reflect Moody’s updated assessment of the operating environment in the country and the relatively resilient credit profiles of Democratic Republic of Congo (DRC)-based banks amid the coronavirus pandemic. Moody’s raised its banking Macro profile for the DRC to ‘Very Weak’ from ‘Very Weak-‘. Moody’s typically assigns a ‘Very Weak-‘ Macro Profile, which is the lowest possible Macro Profile in the rating agency’s scale, to banking systems that are in or close to a banking crisis.In the case of DRC, the revised ‘Very Weak’ Macro Profile captures the challenges of the operating environment in which DRC banks operate, including low economic strength, very low institutional strength and high susceptibility to event risk. Our assessment of the DRC’s operating environment also reflects difficult credit conditions, and funding conditions that are vulnerable to fragile depositor confidence and extensive use of the US dollar.A full list of affected ratings is at the bottom of the press release.RATINGS RATIONALE– AFFIRMATION OF DEPOSIT RATINGS OF THE TWO BANKS REFLECTS BANKS’ RELATIVELY RESILIENT CREDIT PROFILESMoody’s affirmation of the two DRC banks’ long-term ratings reflects the rating agency’s expectation that DRC banks’ underlying financial performance will remain broadly resilient.The banks have deposit based funding and strong liquid resources, with liquid banking assets representing 51% of tangible banking assets for rated banks as of December 2019. Although the rating agency estimates that the banks’ underlying profitability was lower in 2020 than in 2019 amid the coronavirus pandemic, it expects a recovery in 2021, supported by the increase in commodity prices.Moody’s affirmation also reflects the rating agency’s view that the banks’ problem loans coverage and capitalisation (Tier 1 ratio of 10.4 as […]
Equity Banque Commerciale du Congo S.A. — Moody’s affirms the long-term deposit ratings of two banks based in Democratic Republic of Congo
