Banking
GCR Affirms FCMB A-(NG) Rating with Negative Outlook
By Modupe Gbadeyanka
One of the local rating agencies, Global Credit Ratings (GCR), has affirmed the national scale credit ratings assigned to First City Monument Bank (FCMB) of A-(NG) and A2(NG) in the long term and short term respectively; with the outlook accorded as negative.
GCR disclosed in a statement issued on Friday, August 25, 2017, that the ratings are valid until August 2018.
Explaining the rationale behind the ratings, GCR the ratings reflect the lender’s financial and competitive position as a mid-sized (Tier 2) bank in Nigeria based on its key financial performance metrics.
Despite improved operating performance in FY16, the bank remains exposed to ongoing challenges in the domestic operating environment including slow economic growth, currency weakness, foreign exchange (forex) shortages and policy uncertainty, that continue to exert pressure on banks’ (including FCMB) asset quality and earnings, the rating agency said.
It noted that shareholders’ funds grew by 9.6 percent at FY16, underpinned by retained earnings. Capital adequacy was, however, impacted by inflated risk weighted assets (mainly due to the effect of naira depreciation on the balance of risk-weighted assets denominated in foreign currency) which led to a slight decline in the risk weighed capital adequacy ratio (CAR) to 16.5 percent at FY16 (FY15: 16.9 percent), although remaining above the 15 percent statutory minimum requirement. At 1H FY17, the ratio was reported at an improved 17 percent.
Although the gross non-performing loan (NPL) ratio improved to 3.7 percent in FY16 (FY15: 4.2 percent), this was chiefly supported by the loan book clean-up exercise undertaken by the bank, with impaired credits totalling N32.5 billion written off the bank’s loan book during the year.
Given these write offs, specific coverage of impaired loans declined to 25.5 percent at FY16 (FY15: 45.2 percent).
The NPL ratio rose to 4.7 percent at 1H FY17, but remained within the regulatory limit of 5 percent. Management has tightened lending criteria, established a dedicated unit to focus on recoveries, and committed to diversify the loan book by targeting lending to less susceptible sectors to contain NPL formation and ensure a quality loan book going forward.
A matching of assets/liabilities maturities at FY16 showed cumulative liquidity gaps across the ‘less than 12 months’ maturity buckets.
The liquidity gap stood at N253.7 billion in the ‘less than 30 days’ maturity bucket and equated to 1.4x capital at FY16.
Furthermore, although the bank closed with 31.2 percent statutory liquidity at FY16, liquidity pressure was evidenced as zero buffer was maintained above the 30% statutory requirement at some points during the year.
This pressure has persisted into 1H FY17, with the statutory liquidity ratio at 30.1 percent, GCR said.
Notwithstanding, it added, the 150.4 percent escalation in impairments charges to N35.5 billion, net profit after tax grew 3.4x to N12 billion during FY16.
Growth was mainly supported by large one-off revaluation gains booked on net foreign currency positions arising from Naira devaluation during the year.
Accordingly, ROaE and ROaA ended stronger at 10.4 percent (FY15: 4 percent) and 1.4 percent (FY15: 0.5 percent) in FY16 respectively.
Unaudited financial results at 1H FY17, reported pre-tax profit of N2.5 billion, representing an annualised 63.8 percent decline.
GCR said upward movement in the rating(s) or outlook could result from sustained improvement in the bank’s profitability, asset quality, capital and liquidity metrics, as well as an enhanced competitive position.
It noted that negative rating action may follow pressure on asset quality, profitability, capital and/or liquidity metrics.
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.
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.”
By Adedapo Adesanya
The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.
The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.
Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.
Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.
“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”
Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.
“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.
Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.
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