Afreximbank Defends Financial Integrity Amid Fitch’s Negative Outlook Over Sovereign Debt Risk

The African Export-Import Bank (Afreximbank) has responded to a recent Fitch Ratings report that assigned a negative outlook to the bank, clarifying that the concerns raised stem from differing approaches to assessing non-performing loans (NPLs). In a statement released Tuesday, the bank emphasized its adherence to high financial transparency standards and strict compliance with International Financial Reporting Standards (IFRS), particularly IFRS 9. This standard governs the staging and classification of loan performance, which the bank says it applies rigorously using forward-looking data—an approach that differs from Fitch’s criteria.

Despite the downgrade, Fitch acknowledged Afreximbank’s solid financial standing. The agency cited the bank’s high collateral levels, effective credit risk mitigants, and substantial provisions on certain sovereign exposures. These factors, Fitch noted, help cushion the bank against potential losses. Afreximbank pointed to these acknowledgements as evidence of its financial resilience and sound risk management practices.

The ratings agency also highlighted the bank’s strong capital position, noting a robust equity-to-assets ratio and “excellent internal capital generation.” Additionally, Afreximbank maintains low concentration risk and holds a high-quality treasury portfolio, earning a strong liquidity assessment of “a.” These attributes, the bank argues, underscore the institution’s overall financial health and responsible governance structure.

Afreximbank contested Fitch’s key concern: the potential restructuring of sovereign debt owed by some member countries. The bank insisted this risk is overstated and clarified that it is not involved in any debt restructuring talks with member states. Citing the treaty that established the bank, which was signed by 53 African nations, Afreximbank stressed that its operations are governed by treaty law and cannot be arbitrarily altered by external parties or perceptions.

Reaffirming its commitment to Africa, Afreximbank concluded by highlighting its unwavering focus on supporting member nations through economic hardships. It remains dedicated to trade-led development, macroeconomic stability, and promoting sustainable economic growth across the continent, despite the current challenges and external ratings pressures.

Source: Business day