Banking

GCR Affirms A-(NG) Rating on Coronation Merchant Bank

Published

6 years ago

04/08/2018

By Dipo Olowookere

Indigenous rating agency, Global Credit Ratings (GCR), has announced according its national scale long term and short term ratings of A-(NG) and A2(NG) respectively to Coronation Merchant Bank Limited, with the outlook stable.

In a statement issued by the firm, it explained that the ratings reflect Coronation MB evolving competitive position in the merchant banking subsector since commencement of operation in the second half of FY15.

The bank has been able to leverage off its experience and track record of over two decades in the financial services industry. Furthermore, cognisance is taken of the fact that the bank has engaged a pool of experienced professionals to drive its new strategic intent, GCR said.

According to the statement, capitalisation is considered adequate for the current level of operation and while shareholders’ funds grew to N29.2 billion at FY17, capital adequacy ratio (CAR) equated to a lower 24.8 percent (FY16: 40.1 percent) due to increase in risk weighted assets, but remained above the required minimum of 10 percent for merchant banks.

Also, management has also commenced the process to raise debt capital in 2H FY18 to further support operations.

GCR noted that asset quality metrics remained sound as the bank is yet to record any delinquent asset since commencement of its merchant banking operation.

It said further that the loan book has been largely characterised by short-dated trade finance facilities granted to large corporates. Total loan loss provision stood at N8.2 million, following a write back of N51.6 million in FY17.

The rating company explained that the bank’s regulatory liquidity ratio stood at 53.4 percent at FY17 (FY16: 51.3 percent), against the required minimum of 20 percent for the subsector.

However, liquidity gap of N25.1 billion (FY16: N36.7 billion) was reflected in the less than one month matching of assets and liabilities.

Further supporting the bank’s liquidity profile is the cash and equivalent of N24.4 billion as at FY17 and a sizeable 66.6 percent of its investment securities in treasury bills (T-bills) and Federal Government of Nigeria bonds (FGN bonds).

Also, Coronation MB successfully raised funds through commercial paper (CP) issue in 1H FY18 which received 180 percent subscription level, equating a total of N18.2 billion. This is to further aid balance sheet management, and considered additional support to the rating.

Performance metrics moderated in FY17, underpinned by increase in cost of funding which was largely triggered by the high interest rate in operating environment during the period. As such, while the bank recorded a 66.6 percent rise in interest income, interest expenses rose by a higher 166.8 percent and resulted in 3.5 percent decline in net interest income. Furthermore, profitability was constrained by 29.6 percent increase in operating expenses, given the increase in staff and IT upgrade cost. As such, pre-tax profit equated to N4.9 billion in FY17, representing 5.1 percent decline from FY16 level.

Consequently, return on average equity and assets (ROaE and ROaA) closed the year at 16.8 percent and 3.9 percent respectively from 21.6 percent and 5.6 percent respectively in FY16. Also, performance as at 1H FY18 appears somewhat in line with FY17 actual, albeit below budgeted figures on annualised basis.

An upward movement in the ratings may follow a sustained improvement in profitability and earnings, while maintaining sound asset quality metrics. Furthermore, a downward review of the ratings may result from a significant decline in the asset quality, capitalisation or liquidity profile of the bank. Furthermore, a significant decline in earnings or profitability, such that the bank is unable to compete with peers, may lead to a negative rating action.

Banking

CBN Insists Old, New Naira Notes Remain Valid Beyond December 31

Published

21 hours ago

14/12/2024

Aduragbemi Omiyale

By Aduragbemi Omiyale

The Central Bank of Nigeria (CBN) has reaffirmed that the old and new Naira notes will continue to be used for financial transactions in the country beyond December 31, 2024.

There had been rumours that the old and redesigned N200, N500, and N1,000 banknotes would no longer be legal tender from Wednesday, January 1, 2025, because the central bank would phase out the notes in compliance with a Supreme Court judgement of November 29, 2023.

But the apex bank, in a statement signed by its acting Director of Corporate Communications, Mrs Hakama Ali, on Friday, clarified that the apex court’s judgement being cited did not authorise the bank to phase out the banknotes by the end of this year.

According to her, the court allowed the CBN to leave the old and new notes to be used concurrently until it decides to gradually phase out the former.

The central bank’s spokesperson urged members of the public to disregard claims suggesting the old series of these denominations would cease to be valid at the end of this year.

She urged them to continue to accept all Naira notes for daily transactions, encouraging banks to also adopt alternative payment methods such as electronic channels to reduce the pressure on physical cash usage.

“The Central Bank of Nigeria (CBN) has observed the misinformation regarding the validity of the old N1000, N500, and N200 banknotes currently in circulation.

“In line with the bank’s previous clarifications and to offer further assurance, the CBN wishes to reiterate that the subsisting Supreme Court ruling granted on November 29, 2023, permits the concurrent circulation of all versions of the N1000, N500, and N200 denominations of the Naira indefinitely.

“For the avoidance of doubt, all versions of the naira, including the old and new designs of N1000, N500, and N200 denominations, as well as the commemorative and previous designs of the N100 denomination, remain valid and continue to be legal tender without any deadlines,” the statement noted.

Banking

Access Bank to Acquire 100% Equity in South Africa’s Bidvest

Published

3 days ago

12/12/2024

Adedapo Adesanya

By Adedapo Adesanya

Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.

The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.

This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.

The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.

Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.

As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.

Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.

This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).

Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.

The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.

Banking

Access Bank Opens Branch in Malta to Strengthen Europe-Africa Trade Ties

Published

4 days ago

11/12/2024

Modupe Gbadeyanka

By Modupe Gbadeyanka

To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.

It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.

Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).

Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.

Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.

This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.

It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.

“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.

“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.

“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).

“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.

Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”