Banking
Fitch Affirms Zenith Bank, UBA, GTBank, Access Bank Ratings
By Dipo Olowookere
Fitch Ratings has announced affirming the ratings on Zenith Bank, United Bank for Africa (UBA), Guaranty Trust Bank (GTBank) and Access Bank [ZUGA Banks], all with stable outlook.
In a statement issued by the agency, it was stated that the Long-Term Issuer Default Rating (IDR) on Zenith Bank and UBA were left at ‘B+’, while the Long-Term Issuer Default Rating (IDR) on Access Bank was affirmed at ‘B’, the Long-Term Foreign Currency Issuer Default Rating (IDR) on GTBank was affirmed at ‘B+’.
Fitch said the Viability Rating (VR) of Zenith Bank is among the highest it assigned to a Nigerian bank, reflecting the lender’s well-entrenched domestic franchise and market share.
“Zenith Bank is particularly strong in the prime corporate segment with a growing focus on retail banking. The bank’s franchise strength, management quality and clear strategy have allowed it to outperform peers through several cycles,” it said.
It further said the bank’s financial metrics are also strong compared with peers, pointing out that solid earnings generation and profitability (operating profit/risk-weighted assets of 7.1 percent in 1H19) reflect good margins, high levels of non-interest revenue and good cost control. Loan impairment charges have increased moderately and reflect some asset quality deterioration.
According to Fitch, Zenith Bank’s impaired loans/IFRS 9 Stage 3 ratio was 8.5 percent at end-1H19 (slightly up from 9.0 percent at end-2018) with loan loss allowance coverage at a comfortable 90 percent. Impaired loans rose in 2018 from consistently low levels due to a single large problem loan, highlighting the bank’s sensitivity to credit concentrations by obligor and industry.
It said the bank’s high capitalisation is a rating strength, with a regulatory total capital adequacy ratio of 23.4 percent at end-1H19, saying this is comfortably above the minimum 15 percent regulatory requirement (excluding its DSIB buffer).
For UBA, Fitch said its VR also reflects a strong franchise in Nigeria, as highlighted by market shares and a sizeable retail and current and savings accounts (CASA) deposit base, which translates into pricing power over smaller peers.
UBA’s overall franchise, Fitch said, is strengthened by a network of 19 subsidiaries across Sub-Saharan African (SSA) countries outside of Nigeria, which positions the bank to serve corporate customers operating across the continent and capitalise on trade flows. Operations across the rest of Africa (28% of assets at end-1H19; 41% of net income in 2018) provide a valuable source of diversification, particularly given the small contribution of each country.
It said execution on strategy has been particularly strong, as highlighted by exceptional retail deposit growth, increasing earnings contributions from the rest of Africa business and generally strong financial performance during challenging economic conditions.
However, it noted that loan quality remains weak as its impaired (Stage 3 under IFRS 9) loans ratio (5.6 percent at end-1H19) remains low relative to the sector average, but a large stock of Stage 2 loans (24 percent of gross loans at end-1H19) that are concentrated by single-borrower and derive from troubled sectors such as power and oil and gas, present a risk to UBA’s financial profile.
On the part of GTBank, Fitch said the IDRs and National Ratings are driven by the bank’s intrinsic creditworthiness, as defined by its VR, the highest assigned to a Nigerian bank. It said the VR also considers the bank’s strong financial metrics and high performance ratios, comfortable capital buffers and highly concentrated loan book.
It said the lender’s strong earnings support capitalisation and capital adequacy is a rating strength.
“GTB’s Fitch Core Capital/risk weighted assets ratio reached a high 26.7% at end-June 2019 and the bank’s internal target is to maintain regulatory capital ratios in excess of 17%, comfortably above the 15% prudential minimum required.
“Asset quality ratios compare well with peers and efforts to recover impaired loans are proving successful. The impaired loans/total loans ratio is on a declining trend, improving to 6.8% at end-June 2019. Loan loss reserve coverage reached 80%, which appears adequate considering available collateral. GTB’s IFRS 9 Stage 2 loans were equivalent to approximately 11% of loans at end-June 2019, which is broadly in line with close peers,” it said.
Fitch further said GTBank’s balance sheet is liquid. Loan deleveraging continued in 1H19, while deposit inflows are still positive (up 6%). Excess liquidity continues to be invested into Nigerian government securities. Regulatory pressure to encourage banks to lend to the real economy may result in positive loan growth during 2H19. Liquidity management is sound in both foreign and local currency.
For Access Bank, the rating agency said the acquisition of Diamond Bank in the first quarter of 2019 increased the lender’s consolidated assets by around 30 percent, creating Nigeria’s largest bank, with a 23 percent share of deposits (previously 11 percent).
“Following the acquisition, Access Bank’s traditional corporate business model is more balanced across retail and SME segments. Management’s objectives are to pursue a retail-focused, digitally-driven, growth strategy and position the bank as a regional leader in Africa.
“If achieved, this will boost Access Bank’s profile, but factors such as franchise, business model and strategic objectives currently have only a moderate influence on the bank’s ratings,” it said.
It added that, Diamond Bank’s asset quality was weak but management is successfully executing on a plan to write off impaired loans and focus on recoveries. The impaired (Stage 3) loans/gross loans ratio, which had exceeded 10% immediately following Diamond’s acquisition, fell back to 6.8% at end-June 2019.
This is broadly in line with ratios displayed by the most highly rated Nigerian banks (around 7%) but Access Bank’s share of Stage 2 loans as a proportion of gross loans is still fairly high at around 20%. Total loan loss coverage of Stage 3 loans is high at 112% (49% immediately post-acquisition), but specific coverage of Stage 2 loans is still low.
By Modupe Gbadeyanka
Nigeria’s Vice President, Mr Kashim Shettima, has expressed his delight over the unicorn status attained by Moniepoint Incorporated in October 2024 after it secured a $110 million funding package from Google.
Speaking when the company paid a courtesy visit to him at the Presidential Villa recently, the VP said he was happy with the growth trajectory of the financial technology (fintech) company, charging the team not to rest on its oars.
He promised to be the “chief promoter” of Moniepoint because the firm has become the pride of the country and must be supported by all.
Mr Shettima urged the company to continue expanding its global footprint, referencing his ongoing support for similar initiatives such as Amal Hassan’s Outsource to Nigeria project.
The Vice President described Moniepoint as a “kaleidoscope of colours” because of the diversity of its team, saying it reflects the beauty of Nigeria’s multicultural and multi-regional identity.
He was particularly pleased with the inclusion of individuals from various regions and backgrounds, including a notable representation of women in leadership and operational roles.
However, he charged the organisation and others to ensure stronger auditing measures to prevent misuse of the platform, especially by fraudsters and criminal elements, tasking them to remain vigilant and proactive in addressing these challenges.
Earlier, the chief executive of Moniepoint, Mr Tosin Eniolorunda, thanked the federal government for its dedication to digital innovation and financial inclusion.
He emphasized Moniepoint’s commitment to Nigeria’s financial ecosystem, stating that the fintech giant has grown into Africa’s latest unicorn this year, a testament to its resilience and innovation.
“At Moniepoint, we are big believers in driving collaborations across the entire eco-system and this is premised on collaboration being the cornerstone of progress.
“Our engagement here underscores our intentionality to enhance government business relationships in a way that powers the dreams of millions of many more Nigerians.
“Together, we can unlock opportunities, transform lives, and build a more inclusive economy for all,” Mr Eniolorunda, who led the team comprising the Managing Director of Moniepoint Microfinance Bank, Mr Babatunde Olofin; the Vice President for Corporate Affairs at Moniepoint, Didi Uwemakpan; the SVP for Investor Relations and M&A, Ross Strike; the Head of Partnerships, Efemena Ogie; the Regional Manager for North West, Abdulmumin Tijjani; and the Partner at Lightrock Global, Ravi Sharma, said.
By Adedapo Adesanya
The Central Bank of Nigeria has set a minimum trade value of $100,000 for interbank foreign exchange trading via the Electronic Foreign Exchange Matching System (EFEMS), which is set to go live on December 2.
This was contained in a new directive dated November 25, 2024, and signed by CBN’s Director of the Financial Markets Department, Mrs Omolara Duke.
The circular also noted that the development is part of efforts to ensure transparency, efficiency, and compliance within Nigeria’s FX market.
The EFEMS is designed to streamline interbank FX trading, reduce counterparty risks, and ensure adherence to CBN regulations.
The statement also said CBN has designated Bloomberg’s BMatch as the official order-matching platform for interbank transactions, with trading hours set between 9:00 am and 4:00 pm West Africa Time on business days.
The apex bank also said the $100,000 minimum tradable amount comes with incremental clip sizes of $50,000.
The EFEMS is also limited to spot FX transactions involving the Nigerian Naira and the United States Dollar. This means transactions occur “on the spot” or close to the trade date.
The CBN, however, retained the discretion to introduce other currency pairs when deemed necessary.
The guidelines document read, “All trades consummated on EFEMS are binding unless cancelled by mutual agreement of both parties with written approval from the CBN.
“The minimum tradable amount is US$100,000.00, with incremental clip sizes of US$50,000.00.
“Participants must set credit and settlement limits for other counterparties in the system. Transactions exceeding these limits will not be executed.
“Participants must have adequate credit and settlement limits set for the CBN as its counterparty bank.
“Participants are required to comply with the Nigerian Foreign Exchange Code and other CBN regulations.”
The apex bank noted that participation in the EFEMS is limited to authorised dealer banks while other institutions wishing to join the platform must first obtain prior approval.
These entities are also required to execute agreements with the CBN-approved platform provider, maintain accurate profiles, and operate within prescribed credit and settlement limits.
Withdrawal from the platform must be preceded by a 30-day notice, along with the resolution of any outstanding obligations.
Also, trades conducted via the platform will remain anonymous until matched. Counterparty details will only be revealed once transactions are concluded and are in line with settlement protocols.
Transactions exceeding set limits or conducted outside EFEMS parameters must be reported promptly and logged onto the FX blotter within 10 minutes.
The CBN emphasised that it will closely monitor all transactions on EFEMS to ensure market integrity and transparency.
Participants are also required to submit daily reports detailing trade volumes, settlement statuses, and counterparties.
The CBN discloses that it also reserves the right to publish aggregated or disaggregated trade data for market analysis, subject to confidentiality agreements.
Any violations of the EFEMS guidelines or related regulations will attract strict penalties, including the suspension or revocation of access rights.
The CBN further stated that it will periodically review the platform’s operations to ensure efficiency and compliance with its directives.
By Aduragbemi Omiyale
Access Bank Plc has assured customers that their funds are safe with the company, stressing that there’s nothing to worry about.
The lender gave this assurance in reaction to a video making the rounds on social media that about N500 million belonging to a customer was missing.
The financial institution described this allegation as “baseless,” denying any involvement in “any unethical behaviour.”
“Our attention has been drawn to a video on social media wherein allegations of missing funds and unethical behaviour have been made against Access Bank PLC.
“First and foremost, we wish to emphasise that the safety and security of our customers’ funds are core priorities which we take seriously. Second, Access Bank Plc does not engage in or condone any unethical behaviour.
“In the instant case, the allegations of missing funds in the Bank are most untrue and baseless.
“There is no N500 million or any other fund or amount missing from the subject customer’s account or any other customer’s account with us.
“We and other independent stakeholders in the banking industry have thoroughly investigated these allegations and independently arrived at the same conclusions.
“Access Bank PLC operates with the highest ethical standards, and we protect our customers’ interests whilst also respecting privacy laws.
“Consequently, whilst we have engaged and will continue to engage with our customers, we must advise the public not to rely on or believe sensational and unverified claims that are designed to titillate and mislead the public,” a statement from the firm stated.
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