Banking
Fitch Affirms Afreximbank at ‘BBB-‘ With Stable Outlook
By Adedapo Adesanya
A leading credit rating agency, Fitch Ratings, has affirmed African Export-Import Bank’s (Afreximbank) Long-Term Issuer Default Rating (IDR) at ‘BBB-‘ with Stable Outlook. Fitch also affirmed the bank’s Short-Term Issuer Default Rating (IDR) at ‘F3’ and senior unsecured debt at ‘BBB-‘.
In a report, the agency noted that the Afreximbank’s ‘BBB-‘ rating was driven by the bank’s intrinsic features, including solvency and liquidity, both assessed at ‘a-‘.
Despite the pressure on asset quality resulting from the COVID-19 crisis, the ongoing and expected capital increases support the resilience of the bank’s solvency.
Afreximbank’s solvency assessment of ‘a-‘ reflects its ‘strong’ capitalisation and ‘moderate’ risk profile, a statement from the agency said.
The ‘strong’ capitalisation is underpinned by the equity to assets and guarantees ratio, at 18.1 per cent in 2019, close to 2018 level (18.5 per cent) as the bank’s expansion has been broadly matched by paid-in capital payments from the ongoing $1 billion capital increase (targeted to be completed by end-2021, 91 per cent of which had been raised by the first half of this year) and internal capital generation.
Fitch’s usable capital to risk-weighted assets (FRA) was 21 per cent in 2019 (from 20% in 2018), consistent with a ‘moderate’ assessment (15-25 per cent).
The agency said it expects the equity-to-assets and FRA ratios to decline in the coming years as the impact of the COVID-19 crisis on asset quality affects internal capital generation and the bank accelerates loan disbursement in the short-term in response to the crisis. Fitch expects the growth in loans to average close to 20 per cent in 2020-2022.
However, it expects that the bank’s capitalisation metrics should remain consistent with a ‘strong’ assessment by the end of 2022. This assumes continuing payments under the $1 billion capital increase and the start of payments under a new $500 million capital increase, approved in June this year.
The Bureau of African Union Heads of States and Governments recently endorsed a significant increase to the bank’s subscribed capital. Fitch understands that the final approval of this capital increase could take place at the bank’s Annual General Meeting (AGM) in 2021, and the first paid-in capital payments would start shortly thereafter. In Fitch’s view, this capital increase would support the resilience of the bank’s solvency, despite the negative impact of the COVID-19 crisis on asset quality.
Fitch assesses Afreximbank’s overall exposure to risks as ‘moderate’, balancing its ‘high’ credit risk profile and ‘moderate’ risk management policies against its ‘low’ concentration risk and ‘very low’ equity and market risks.
The agency expects the average rating of the bank’s loan portfolio before accounting for credit risk mitigants to decline to ‘CCC’ over the medium term from ‘B-‘ as of end-2019.
Afreximbank’s business environment is deemed ‘high risk’, primarily reflecting its strategy, characterised by the rapid growth of its banking operations in high-risk countries.
Fitch assesses Afreximbank’s support rating at ‘bb’, unchanged from the previous review. The average rating of key shareholders fell to ‘BB-‘ following the change in the bank’s shareholder base and the recent downgrade of Nigeria, the largest shareholder.
The bank’s callable capital is partially supported by medium-term credit risk mitigants, which provides a one-notch uplift over the bank’s shareholders’ average credit quality, leading to ‘bb’ support capacity.
Fitch has revised the bank’s shareholders’ propensity to support to ‘strong’ from ‘moderate’ previously. This reflects regular inflows of fresh capital and the recent endorsement for a significant increase to the bank’s subscribed capital. The strong propensity results in a support assessment of ‘bb’.
By Adedapo Adesanya
Shareholders of the United Bank for Africa (UBA) Plc may receive a final dividend of N3.00 per share if approved at the next Annual General Meeting (AGM).
The cash reward if for the 2024 financial year, the company revealed in its audited financial statements for the period under review.
In the results filed to the Nigerian Exchange (NGX) Limited on Monday, the proposed final dividend and the N2.00 per share interim dividend paid in October 2024 brings the total dividend for the year to N5.00, amounting to a payout ratio of 26.6 per cent versus the 16.32 per cent recorded in the previous financial year and a yield of 13.1 per cent versus 10.92 per cent in 2023.
The proposed dividend was a result of the impressive performance and in fulfillment of the promise made by the UBA Group Chairman, Mr Tony Elumelu, to shareholders at the last AGM.
The lender recorded a profit before tax of N803.72 billion, 6.1 per cent higher than the N757.68 billion recorded in the 2023 financial year and the profit after tax went up by 26.14 per cent to N766.6 billion from N607.7 billion.
The bank’s gross earnings also grew significantly, 53.6 per cent, from N2.08 trillion to N3.19 trillion, while the total assets rose remarkably by 46.8 per cent from N20.65 trillion to N30.4 trillion.
The chief executive of UBA, Mr Oliver Alawuba, stated that the 2024 financial performance demonstrates the bank’s continued focus on driving earnings growth, preserving asset quality, expanding business operations and deepening market share.
“Our continued investment in our highly diversified global network allows UBA to deliver high-quality, consistent earnings. Our businesses have been able to grow product and service income and expand our deposit base, allowing the Group to increase earnings while maintaining strong spreads and margins,” Mr Alawuba highlighted.
According to him, “With total deposit increasing by 42.03 per cent from N17.4 trillion in 2023 to N24.7 trillion and total assets hitting N30.4 trillion from N20.7 trillion, the just-released results reflect broad-based growth across all core businesses and were achieved despite prevailing macroeconomic challenges, geopolitical uncertainties, and exchange rate volatilities.”
He expressed excitement at the marked improvement recorded in the bank’s core earnings profile, as he explained that the profit is derived from high-quality income streams from funding intermediation, fees and commissions, thus reflecting strong long-term, sustainable revenue generation capacity.
“Our ex-Nigeria (Rest of Africa & International) operations have expanded significantly over the past five years, now contributing 51.7% of Group revenue, up from 31% in 2019, delivering diversification benefits and further boosting long-term shareholder value.
“This will continue to grow, as we further explore strategic markets that align with our overall vision. We are currently upgrading our business scope and authorization in France, and considering other viable markets in the short to medium term,” Mr Alawuba noted.
He pointed out the bank’s resolve to invest continuously in technology, data analytics, product innovation, staff training and development, which, according to him, will collectively enhance our customers’ experience.
On his part, UBA’s Executive Director of Finance and Risk Management, Mr Ugo Nwaghodoh, said the bank recorded triple-digit growth in net interest income, resulting in a remarkable improvement in net interest margin from 6.83 per cent in 2023 to 9.02 per cent, while also recording strong double-digit growth in fee and commission income lines of 91.66 per cent.
“UBA Group continues to demonstrate strong capital levels, with shareholders’ funds growth of 68.4% to N3.42 trillion and a solid capital adequacy ratio of 31.0%., and as we defensibly position the portfolio to navigate prevailing global and regional macroeconomic upheavals, asset quality improved, with NPL ratio moderating to 5.58%, with strong provision coverage at 81%”, Mr Nwaghodoh noted.
By Modupe Gbadeyanka
Making payments for at malls, restaurants, petrol stations, and other places have now been made seamless by Verve through its contactless cards, which are now available to customers.
This payment method provides a safe, fast, and convenient way to handle everyday transactions.
Customers can enjoy this service by simply tapping their Verve cards on a contactless-enabled terminal, input their PIN, and complete the transaction without hassles.
This method eliminates unnecessary delays, making chance for a smoother and more efficient payment experience.
It is available for use on an extensive network of payment terminals throughout Nigeria, including contactless-enabled terminals such as those provided by Opay, Palmpay, Global Accelerex, Interswitch, Paystack, and even at FAAN Terminals around airports.
Verve said users have to first confirm that the payment terminal is contactless enabled and when this is done, the user has to hold the Verve Card over the terminal for a few seconds, and wait for confirmation, which may include a beep or a notification on the screen displaying the transaction total. After this is done, the PIN must be entered and the payment is completed.
The company disclosed that this technology was designed not only to save user’s time but also to elevate the payment experience, making it more efficient and enjoyable.
It also stated that a special attention was placed on security for secure financial transactions. The Verve card incorporates advanced security technologies to ensure that transactions remain safe and protected.
To enhance security further, after confirming the transaction amount, a customer will be required to enter the PIN, adding an extra layer of safety.
By Dipo Olowookere
One of the leading financial institutions in Nigeria, Access Bank Plc, has commenced the sale of commercial paper worth N194 billion under its N400 billion commercial paper programme.
Access Bank, one of the subsidiaries of a financial services provider, Access Holdings Plc, currently trades its equities at the NASD OTC Securities Exchange, with its share price closing flat at N19.30 per unit on Thursday.
Subscription for the debt instrument began on Wednesday, March 20, 2025, and will close on Tuesday, March 25, 2025.
The lender is offering the commercial paper for sale in two tenors; 180 days and 270 days, according to details of the exercise obtained by Business Post.
It is selling the six-month maturity at a discounted rate of 19.44 per cent and the nine-month tenor at 20.92 per cent. The minimum subscription is N5 million and in multiples of N1,000 thereafter.
Access Bank combines a strong retail customer franchise and digital platform with deep corporate banking expertise, proven risk management and capital management capabilities.
The lender was the first deposit money bank (DMB) in the country to meet the N500 billion minimum capital requirement of the Central Bank of Nigeria (CBN) for banks with international operations, with its share capital exceeding N600 billion.
The bank has been acquiring different financial institutions outside the country, including in South Africa, as part of its expansion drive.
It operates commercial banking services through a network of more than 700 branches and service outlets spanning three continents, 24 countries and over 60 million customers spread across Africa, Europe and Asia.
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