Banking
S&P Affirms Ecobank’s Ratings, Says Bank Will Sustain Growth
By Dipo Olowookere
The ‘B-/B’ long- and short-term issuer credit ratings on Togo-based Ecobank Transnational Incorporated (ETI) have been affirmed by S&P Global Ratings.
Also, the firm its ‘B/B’ long- and short-term issuer credit ratings on Ecobank Nigeria Ltd with both outlooks stable.
A statement issued by S&P explained that the affirmation reflected its expectation that Ecobank group’s financial performance will improve gradually over the next 12-24 months, with lower problematic assets and slightly higher profitability on the back of more stable macroeconomic conditions in key operating markets.
In 2017, the group returned to profitability as a result of a significant decline in cost of risk and reduced operating costs.
“We expect the group’s asset quality indicators to continue improving over the next 12-24 months, including nonperforming loans (NPLs; loans overdue by more than 90 days) falling to around 7%-8% of total loans and coverage of NPLs by provisions increasing above 90%.
“To that end, the group is strengthening its credit risk management framework and monitoring processes,” the rating agency said.
It noted that under its base-case scenario, Ecobank will also maintain relatively elevated credit provisions at around 2.6% of total loans as it strengthens its NPL coverage ratio and transitions to International Financial Reporting Standard (IFRS) 9.
According to S&P, coverage of NPLs by provisions improved to 81% in the first half of 2018 from 52% at year-end 2017, incorporating $299 million of IFRS 9 provisions.
“We still view the group’s weak loss experience and exposure to moderate coverage of NPLs compared with peers as negative for its credit profile.
“We expect the group’s return on equity will average 15% over the next 12-24 months, which would somewhat support a stabilization of the group’s risk-adjusted capital (RAC) ratio around 3.3%-3.6% over the same period, assuming no dividend distribution. We see capitalization as a weakness for the group’s overall credit profile,” the statement said.
S&P noted Ecobank’s strong footprint in Africa and the new management team’s efforts to address its asset quality issues, stabilising its financial profile, and shift its strategy toward a targeted country-by-country approach rather than geographic expansion as a priority over earnings.
The rating agency pointed out that the funding base of Ecobank and its subsidiaries were in line with peers’, maintaining a reasonable level of liquidity.
“All of the group’s subsidiaries are largely funded by short-term customer deposits (total deposits accounted for 90% of the funding base and 173% of total loans on June 30, 2018), with a preference for retail and nonfinancial corporate current and savings accounts to lower the cost of funds. There is fungibility of liquidity within the group.
“Furthermore, at 134% as of June 30, 2018, the group’s stable funding ratio compares well with peers’. The group’s broad liquid assets-to-short-term wholesale funding ratio was at 7.7x at end-June
2018, while its net broad liquid assets covered 46% of short-term deposits at the same date.
“Overall, we assess the group credit profile at ‘b’. Our rating on ETI, the non-operating holding company, is only one notch below the group credit profile (rather than the standard two notches), since we do not see ETI as currently vulnerable to non-payment, or dependent upon favourable business, financial, and economic conditions to meet its financial obligations in the next 12 months.
“In addition, the group’s double leverage has stabilized around 100%, which we consider as moderately high. We understand that the group targets a double leverage ratio close to 100% over the next 12-24 months. We also consider Ecobank Nigeria a core subsidiary of the Ecobank Group.
“Ecobank Nigeria accounted for approximately 30% oftotal group assets at year-end 2017. Therefore, our ratings on Ecobank Nigeria reflect thewider group credit profile,” the statement said.
However, S&P warned that it would lower the rating on Ecobank Nigeria if the group’s RAC ratio fell below 3% or if the group exhibited a higher cost of risk than currently expected.
“We would also lower the rating on Ecobank Nigeria if we took a similar rating action on Nigeria.
“Finally, we would lower the ratings on ETI if we were to notice a significant increase in double leverage above 120%.
“An upgrade of Ecobank Nigeria or ETI appears unlikely over the next 12 months and would require a significant strengthening of capitalization or asset quality,” S&P disclosed.
By Modupe Gbadeyanka
An innovative web banking platform to provide customers with an additional digital channel to manage and carry out uninterrupted daily transactions on their phones, laptops and other devices has been introduced by Bankit Microfinance Bank (MFB).
The emerging small financial institution said it came up with this platform to break barriers and empower individuals and businesses to manage their finances with confidence.
With this, Bankit MFB is redefining convenience and security in banking, ensuring uninterrupted access to financial services, time-saving functionalities, efficiency, real-time account updates, 24/7 availability, and faster transactions.
“In today’s fast-paced digital age, connectivity is everything in banking, and for us, it’s all about improving customer experience with simple banking options and empowering our teeming customers to live their best lives.
“We are revolutionizing the Fintech landscape in Nigeria, and we have developed this solution to empower our customers to bank securely, anytime, anywhere, conveniently.
“We are committed to leveraging technology to enhance the banking experience for all our customers,” the chief executive of Bankit Africa, Mr Yen Choi, stated.
“Bankit’s web banking platform reaffirms one of the bank’s core values – Innovation and sets a new standard for accessibility and security in the banking industry.
“As part of our ongoing commitment to excellence, Bankit Africa will continue to evolve its offerings to meet and exceed the needs of its rising customer base.
“Some key features of this web banking platform include: a simple way to send money, buy airtime, and pay bills with no extra fees or hidden charges,” he added.
Bankit MFB is a licensed financial institution dedicated to providing innovative, customer-centric financial solutions to individuals, businesses, and communities in Nigeria, with a focus on simplicity, convenience, and security.
By Dipo Olowookere
Banking operations at the branches of most financial institutions in Nigeria will end earlier than expected today, Tuesday, December 31, 2024.
The majority of them have sent messages to their customers to inform them of this development.
Business Post sighted some of these notices sent by the banks to their customers via electronic mails (e-mails).
One of them from Guaranty Trust Bank (GTBank) Limited said transactions at its Lagos branches will close for the day and year by 3 pm while in other branches at 2 pm, encouraging customers to use its digital channels for their financial transactions.
“We would like to inform you that all our branches nationwide will close to customers early on Tuesday, December 31, 2024.
“During this period, we encourage you to take advantage of our digital channels for banking needs,” the notice read in parts.
On its part, United Bank for Africa (UBA) Plc said its branches would close for the day at 2 pm across the nation.
“As we prepare for the New Year celebration, our branches will close by 2 pm on Tuesday, December 31, 2024.
“While our branches take a break, our digital channels, the UBA Mobile Banking, Leo, *919# or internet banking are available 24/7 for all your banking needs.
“Your security is our priority. We will never ask for your BVN, card number, PIN or personal details. Suspect anything fraudulent? Call our Fraud Help Desk,” the message from the lender read.
As for Fidelity Bank Plc, it plans to stop banking services at its branches nationwide today by 2 pm to resume on Thursday, January 2, 2025.
“Please be informed that our branches will close at 2 pm on Tuesday, December 31, 2024, ahead of the New Year holiday.
“As always, our digital channels; Mobile Banking, USSD Bank (*770#), PoS, ATMs, Cards, and Ivy Chat, will be available 24/7 for all banking transactions.
“Please note that normal operations will resume at 8 am on Thursday, January 2, 2025,” the bank said in its message to customers.
By Dipo Olowookere
About N147.5 billion has been raised by the First City Monument Bank (FCMB) Group Plc from a public offer, recording a 33 per cent oversubscription, a statement from the financial institution has confirmed.
This disclosure disclosed that the exercise attracted about 42,800 investors, with 92 per cent subscribing via more convenient digital channels such as the bank’s mobile app and ushering in over 39,000 new investors to the financial services group.
The funds from the public offer will help the banking subsidiary of the company, FCMB Limited, meet the new capital base requirement of the Central Bank of Nigeria (CBN).
It was stated that from the N147.5 billion, about N144.6 billion was absorbed through the issuance of 19,802,710,781 ordinary shares at N7.30 per share, bringing total post-offer issued shares to 39,605,421,562 shares.
“We are grateful to our existing shareholders and new investors for coming out strongly to support this offer.
“The success of the public offer reflects significant investor confidence in our strategy and growth potential, as well as trust in the board, leadership, and our people to fulfil our commitments and realise this potential.
“We also extend our profound appreciation to the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), and the Nigerian Exchange (NGX) Limited for their continued foresight, innovation, guidance, and support, which have been instrumental in achieving this significant milestone.
“This marks an important step forward in our journey to unlock new opportunities, create value for our shareholders, and contribute to the economic growth of Nigeria and Africa.
“We remain committed to executing the subsequent phases of our capital-raising program in 2025,” the chief executive of FCMB, Mr Ladi Balogun, said.
Business Post reports that with new funds raised from the public offer, the capital base of FCMB is now N240 billion, more than the N200 billion requested by the CBN for banks with national licenses, the category the lender falls into.
Banks in Nigeria were given till March 2025 by the banking sector to raise their capital base to meet the $1 trillion economy by $1 trillion by 2030.
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