South African rating agency GCR has assigned a positive outlook to Shelter Afrique on expectations of a return to profitability within the next two years.
Effectively, GCR has given the pan-African housing development financier’s long and short-term issuer ratings of B- and B respectively.
The change in outlook to positive reflects the strong improvement in the fundamentals and the ongoing governance reforms at the organization. The Company cut its non-performing loans ratio from 67 percent in 2021 to 51 percent at the end of last year.
“The outlook is positive based on our expectations of stability in governance structures and operational frameworks. We also factor improvements in risk management processes resulting in sustained improvements in asset quality, and capitalization to remain strong with the company returning to profitability within the next 18 months,” GCR said in a commentary.
“The ratings may be improved if there is a defined and material improvement in asset quality without a deterioration in leverage or reserve coverage ratios. The ratings may also be improved if there is a turnaround in earnings with sustained profitability,” GCR noted.
Source: Inspenonline