Sep 2019 Financial News

NCB Financial Group Limited - Credit rating upgrade for its subsidiary, National Commercial Bank Jamaica Limited

Sep 30, 2019

Overview

• On September 27, 2019, S&P Global Ratings raised its long-term foreign and local currency sovereign credit ratings on Jamaica to 'B+' from 'B', reflecting the country's substantial progress in achieving macroeconomic stability and strengthening its external position, which improves its ability to withstand external shocks.
• The sovereign rating action doesn't affect our Banking Industry Country Risk Assessment (BICRA) on Jamaica, which remains at group '8', with an anchor for banks operating in Jamaica at 'bb-'.
• Following the sovereign rating action, we're raising our long-term ratings on domestic lender, NCBJ, to 'B+' from 'B'. The sovereign ratings still limit those on the bank, because we believe its operations would suffer during a hypothetical sovereign default scenario.
• The stable outlook on NCBJ reflects that on Jamaica.

Rating Action
On Sept. 30, 2019, S&P Global Ratings raised its long-term issuer credit ratings on National Commercial Bank Jamaica Ltd. (NCBJ) to 'B+' from 'B' after a similar action on the sovereign. In addition, we affirmed the 'B' short-term issuer credit ratings on the bank. The outlook on NCBJ is now stable.

Outlook
The stable outlook on NCBJ mirrors that on Jamaica, which reflects our view that the country's fiscal policy will remain broadly consistent following the expiration of its IMF Standby Agreement (SBA) in November 2019. We expect the government to continue delivering robust primary fiscal surpluses, leading to a gradual reduction in debt and interest burden, and helping to boost external reserves. We also expect the country to maintain its growth momentum, with modest GDP growth, and that the government will continue advancing toward a more effective monetary policy framework, including a more flexible exchange rate. The stable outlook on the bank also reflects our expectation that it will keep the current fundamentals that support its 'bb-' SACP in the next 12 months.


Source:
S&P Global Ratings
Monday 30th September, 2019