Fitch upgrades Absa Group

Fitch Ratings said it upgraded the foreign-currency issuer default ratings of South Africa-based Absa Group Ltd. and Absa Bank Ltd. to A from A- and their short-term foreign-currency ratings to F1 from F2.

The companies' A+ local-currency issuer default ratings, AAA(zaf) national long-term ratings, F1+ national short-term ratings, B/C individual ratings and 1 support ratings were affirmed, along with Absa Bank's A+/AAA(zaf) domestic medium-term senior notes, A/AA+(zaf) local-currency subordinated notes and AA+(zaf) subordinated unsecured callable notes.

The outlook is stable.

The upgrade follows Fitch's upgrade of South Africa's country ceiling to A from A-. The foreign-currency issuer default ratings of Absa and Absa Bank had been constrained at A- and are now constrained at A.

The local-currency ratings reflect Absa's majority ownership by Barclays Bank plc and the very high probability, in Fitch's view, of support for Absa and Absa Bank from Barclays as a result of the latter's 57% ownership. Due to the bank's systemic importance to the banking system, it is also likely that support would be forthcoming from the South African Reserve Bank.

The agency added that the individual ratings reflect Absa's enhanced and consistent profitability, sound asset quality and enhanced risk management, balanced by low asset liquidity.

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