GCR affirms Capricorn’s AA rating
Capricorn Investment Holdings is held in high regard by London-based Global Credit Ratings, which has affirmed its AA credit rating.
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Global Credit Ratings (GCR) this week affirmed Capricorn Investment Holdings an AA and A1 in the long run and short run respectively, while Capricorn’s outlook was accorded as stable.
The ratings agency also affirmed Bank Windhoek Limited similar ratings to that of its parent, Capricorn, while according it a stable outlook.
Said GCR: “The ratings of Capricorn Group reflect its strong market position in the Namibian banking industry and significant presence in the insurance and asset management markets, as well as its stable capitalisation and earnings generation, adequate risk management framework and conservative risk appetite.
“Capricorn’s leading operating subsidiary, Bank Windhoek, is the largest locally owned bank and second largest commercial bank in Namibia. Bank Windhoek contributed 98.2% (Financial Year End 2015: 98.1%) of the Capricorn’s consolidated assets at Financial Year End 2016 and 86.6% (Financial Year End 2015: 88.9%) of pre-tax profits. Other non-banking subsidiaries contributed the balance. As such, the Group’s ratings largely replicate the banking subsidiary’s ratings.
“The ratings also reflect the high probability of support from the Namibian authorities, if required, based on Bank Windhoek’s high systemic importance, stemming from its substantial market shares,” GCR said.
“Structural funding concentration and liquidity mismatches reflect the concentration risk in Namibia’s economy. Funding concentration raises liquidity risk, but strong mitigants, including monitoring and strategies to identify [and or] manage liquidity risk are in place. Additional franchise entrenchment, strong liquidity and loss-absorption buffers and steady operating metrics throughout the economic cycle will further strengthen the Group’s financial profile. However, the Group’s significant market position, strong credit profile and high probability of state support limit the likelihood of rating changes over the medium term,” GCR said.
“While GCR expects Capricorn to remain resilient, the prevailing domestic macroeconomic challenges and an uncertain global economic outlook increase downside risk for Capricorn Group’s asset quality metrics and earnings generation. The South African national scale rating may also be influenced by the relative sovereign ratings of South Africa and Namibia and the Group’s credit quality relative to the South African peer universe,” the ratings agency said.
However, GCR warned: “A sharp deterioration in the capital position, liquidity, earnings and asset quality, could see the ratings come under pressure.”
Global Credit Ratings (GCR) this week affirmed Capricorn Investment Holdings an AA and A1 in the long run and short run respectively, while Capricorn’s outlook was accorded as stable.
The ratings agency also affirmed Bank Windhoek Limited similar ratings to that of its parent, Capricorn, while according it a stable outlook.
Said GCR: “The ratings of Capricorn Group reflect its strong market position in the Namibian banking industry and significant presence in the insurance and asset management markets, as well as its stable capitalisation and earnings generation, adequate risk management framework and conservative risk appetite.
“Capricorn’s leading operating subsidiary, Bank Windhoek, is the largest locally owned bank and second largest commercial bank in Namibia. Bank Windhoek contributed 98.2% (Financial Year End 2015: 98.1%) of the Capricorn’s consolidated assets at Financial Year End 2016 and 86.6% (Financial Year End 2015: 88.9%) of pre-tax profits. Other non-banking subsidiaries contributed the balance. As such, the Group’s ratings largely replicate the banking subsidiary’s ratings.
“The ratings also reflect the high probability of support from the Namibian authorities, if required, based on Bank Windhoek’s high systemic importance, stemming from its substantial market shares,” GCR said.
“Structural funding concentration and liquidity mismatches reflect the concentration risk in Namibia’s economy. Funding concentration raises liquidity risk, but strong mitigants, including monitoring and strategies to identify [and or] manage liquidity risk are in place. Additional franchise entrenchment, strong liquidity and loss-absorption buffers and steady operating metrics throughout the economic cycle will further strengthen the Group’s financial profile. However, the Group’s significant market position, strong credit profile and high probability of state support limit the likelihood of rating changes over the medium term,” GCR said.
“While GCR expects Capricorn to remain resilient, the prevailing domestic macroeconomic challenges and an uncertain global economic outlook increase downside risk for Capricorn Group’s asset quality metrics and earnings generation. The South African national scale rating may also be influenced by the relative sovereign ratings of South Africa and Namibia and the Group’s credit quality relative to the South African peer universe,” the ratings agency said.
However, GCR warned: “A sharp deterioration in the capital position, liquidity, earnings and asset quality, could see the ratings come under pressure.”
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