Banking
Moody’s Affirms First Bank’s Deposit Ratings, Predicts Drop in NPL Ratio
By Dipo Olowookere
The B2/Not Prime long-term and short-term local currency deposit ratings of First Bank of Nigeria Limited have been affirmed by Moody’s Investors Service.
In a statement issued on Tuesday and obtained by Business Post, the rating agency said it also affirmed the lender’s B3/Not Prime long-term and short-term foreign currency deposit ratings.
At the same time, Moody’s has affirmed the bank’s B2/Not Prime long-term and short-term, local currency and foreign currency Counterparty Risk Ratings (CRR) and its baseline credit assessment (BCA) and adjusted BCA at b3, while changing the outlook on long-term ratings to stable from negative.
Moody’s explained that the affirmation of First Bank’s ratings was driven by the bank’s moderate capital, resilient pre-provision profitability and a stable funding profile. These strengths are counterbalanced by lender’s still high stock of nonperforming loans (NPLs) compared to other large Nigerian banks, reflecting relatively modest progress in reducing its NPLs.
It also noted that the decision to change the outlook to stable from negative reflects Moody’s view that, while NPLs remain elevated, downside risks to asset quality have considerably diminished following remedial steps taken by the bank and should slowly decline going forward.
In particular, Moody’s noted emphasised that First Bank reduced its foreign currency denominated loans and efforts are underway to reduce single-name concentrations, adding that the improving operating environment, especially in relation to oil prices and the bank’s significant exposure to the upstream oil and gas sector, will also help prevent formation of large stocks of new NPLs.
Moody’s said it expects that the bank’s NPL ratio to reduce further, most plausibly at a slow pace over several quarters, as the bank hopes to resolve its current large problematic loans gradually because of the long time it tends to take to foreclose on collateral in Nigeria.
Moody’s said First Bank benefits from its modest capital, with a ratio of tangible common equity to risk weighted assets at 12.2 percent as of December 2017.
The bank’s pre-provision profitability remains resilient at 4.2 percent at year-end 2017, with Moody’s expecting the lender to maintain its solid pre-provision profitability, supported by its high net interest margins and non-interest income that is benefiting from the bank’s growing alternative channels strategy.
In addition, the rating agency assesses the bank’s funding profile as stable, supported by its large stock of liquid assets and moderate reliance on market funding.
However, First Bank’s strengths are moderated by its high NPLs compared to its Nigerian peers (Nigerian large banks). Despite improvements in its NPLs, the gap between the bank’s NPLs at 20.5 percent as of June 2018 and that of its local peers, at an average of 5.6 percent, remains wide.
“The high NPLs reflect the bank’s relatively still large sectoral and single-name concentration risks and its legacy exposure to the oil and gas industry which created high NPLs during the oil price downturn in 2016.
“Also, the bank’s foreign currency loan book remains high at 48 percent of its total loans as of June 2018,” the statement said.
It added that First Bank continues to make progress in improving its asset quality as the NPL ratio reduced to 20.5 percent as of June 2018, from a peak of 24.2 percent at year-end 2016.
Moody’s says it expects the NPL ratio to gradually fall to 12-15 percent range within the next 12-18 months, driven largely by the on-going balance sheet de-risking and a more favourable operating environment, which will help prevent the formation of new impaired loans.
The bank reduced its foreign currency loan book by 36 percent between 2015 and 2017, adjusted for naira devaluation. The better operating environment, including the current high oil prices, will support performance of First Bank’s large exposure to the upstream oil and gas sector because a majority of these exposures have been restructured on assumption of lower oil price.
The rating agency also expects the lender to benefit from its enhanced risk management governance that resulted in tighter controls and better underwriting standards.
“Moody’s expects better risk management processes will improve the quality of FBN’s new loans and reduce concentration risks.
“First Bank’s loan book, which contracted 7 percent between June 2018 and year-end 2017, will also help contain new NPL formation.
“However, Moody’s expects a moderate recovery in loan growth in the next 12-18 months. The bank increased its ratio of provisions to NPLs to 82 percent, which is now in line with global peers,” it said.
The rating agency noted the bank’s improvements in its foreign currency liquidity. By cutting back foreign-currency lending and paying off some its borrowings, saying First Bank will improve the coverage of its foreign currency borrowings by liquid foreign currency assets (cash and bank balances, loans due from banks and securities for trading) to about 2.5x from 1.9x at year-end 2017.
Moody’s stressed that the bank’s ratings could be upgraded if its asset risk metrics continue to improve toward the median of other large Nigerian banks, adding that the ratings could also be upgraded if Nigeria’s sovereign rating is upgraded.
However, it warned that the ratings could be downgraded if there is a deterioration of the bank’s asset quality metrics that would place negative pressure on its earnings and capital buffers.
“A downgrade of Nigeria’s sovereign rating would also exert pressure on the bank’s ratings,” the statement said.
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has unveiled the fourth edition of its Foreign Exchange Manual as part of efforts to deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
Speaking at the launch of the revised manual in Abuja on Friday, the Governor of the apex bank, Mr Yemi Cardoso, said the document will take effect from June 1, 2026.
He said it was developed after extensive consultations with banks, exporters, importers, corporates, regulators and development partners.
He said the new framework reflects the apex bank’s commitment to modernising the country’s foreign exchange administration in line with international best practices.
Mr Cardoso described the foreign exchange market as a critical pillar of any open economy, noting that effective governance of the sector is essential for sustaining macroeconomic stability and investor confidence.
“Foreign exchange is more than a financial instrument. It anchors price stability, facilitates the flow of goods and capital, and shapes investor sentiment,” he said.
The CBN governor stressed that the revised manual became necessary due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework.
According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Mr Cardoso disclosed that Nigeria’s foreign exchange market has witnessed significant improvement in liquidity since the current administration began reforms in the sector.
He added that daily turnover in the FX market increased from an average of about $100 million in the early days of the administration to between $400 million and $600 million daily.
The CBN Governor added that the market had also recorded transactions of up to $1 billion per day on several occasions in recent months.
“We have gone from a situation where it was more or less a one-way market, where the central bank came in, intervened and went away, to a much more dynamic market,” he stated.
The apex bank boss noted that the reforms were gradually restoring confidence among investors and market participants, encouraging freer entry and exit in the market without unnecessary restrictions.
He also maintained that the nation’s foreign reserves should not be used as the primary tool for funding the foreign exchange market.
“Reserves are reserves. They are not what you look to fund a market,” he said.
The CBN Governor assured stakeholders that the revised manual would be distributed free of charge to authorised dealers while the bank strengthens monitoring mechanisms to ensure compliance, fairness and accountability across the foreign exchange market.
On his part, the Deputy Governor for Economic Policy, Mr Muhammad Abdullahi, said the review formed part of broader reforms initiated by Mr Cardoso to restore confidence, improve transparency and deepen liquidity in the foreign exchange market.
Mr Abdullahi explained that the revised manual introduces several changes aimed at improving ease of doing business and reducing transaction bottlenecks.
Among the notable changes, he noted, are provisions allowing unfettered access to export proceeds, the introduction of non-resident investment accounts and operational guidelines for Pan-African Payment and Settlement System (PAPSS) transactions to support regional trade.
Mr Abdullahi added that the manual also contains new provisions on service exports, revised documentation requirements and updated operational procedures designed to align Nigeria’s FX market with global standards.
He said the apex bank deliberately adopted an ease of doing business approach during the review process to eliminate inefficiencies and ambiguities identified by stakeholders.
“The revised manual is not a stand-alone exercise but part of a broader institutional reform effort designed to strengthen the integrity, credibility and effectiveness of Nigeria’s foreign exchange system,” he said.
By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) has approved the appointment of Mr Julius Omodayo-Owotuga to the board of First Bank of Nigeria Limited as an executive director.
A statement from the company said the appointment of Mr Omodayo-Owotuga became effective on Wednesday, May 13, 2026.
He was appointed to the board of the subsidiary of First Holdco Plc to further strengthen its leadership capacity across strategic finance, governance, risk management, and institutional transformation.
Before now, he served on the board of First Holdco as a non-executive director between 2021 and 2026.
The appointee brings to the board 24 years of experience spanning banking and financial services, infrastructure finance, power, oil & gas, and audit and consulting.
His appointment, according to the notice to the Nigerian Exchange (NGX) Limited, reflects the Bank’s continued commitment to strong governance, disciplined execution, financial resilience, and sustainable long-term growth.
He most recently served as deputy chief executive of Geregu Power Plc, Nigeria’s first listed power generation company, where he played a pivotal role in institutional transformation, governance strengthening, capital market positioning, operational optimisation, and major financing initiatives, including the company’s landmark listing on NGX.
Mr Omodayo-Owotuga previously served as group executive director, Finance & Risk Management at Forte Oil Plc (now Ardova Plc), where he was instrumental in the company’s financial and operational transformation, leading strategic restructuring, capital raising, treasury optimisation, enterprise risk management, and governance improvement initiatives that strengthened long-term shareholder value.
His professional career also includes roles at Africa Finance Corporation, Standard Chartered Bank, KPMG Professional Services and MBC International Bank (Now First Bank Nigeria Limited), providing him with deep experience in institutional finance, treasury management, financial controls, regulatory engagement, and corporate advisory.
Mr Omodayo-Owotuga is a CFA Charter Holder, KPMG-trained Accountant, and a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), the Chartered Institute of Taxation of Nigeria (CITN), and the Institute of Credit Administration. He is also a member of the Institute of Directors (IoD) Nigeria and a Certified Management Accountant.
He holds a Doctorate in Business Administration, a Master’s in Business Administration and a Bachelor’s degree in Accounting. He is an alumnus of Saïd Business School, University of Oxford, IE Business School, Geneva Business School, and the University of Lagos.
By Modupe Gbadeyanka
In recognition of its strategic leadership in advancing the growth and resilience of small and medium-sized enterprises (SMEs), Union Bank of Nigeria Plc has been honoured by the Association of Small Business Owners of Nigeria (ASBON).
The lender was rewarded by the group for its suite of solutions designed to enable business expansion and long-term value creation.
At the Nigeria National SME Business Awards, held recently in Lagos, Union Bank was given the Best SME Growth Banking Initiatives Award for 2025.
The ceremony was organised by ASBON in partnership with the Lagos State government through the Ministry of Commerce, Cooperatives, Trade and Investment.
The event convened stakeholders from the public and private sectors to recognise individuals and organisations driving meaningful impact across Nigeria’s SME ecosystem.
Receiving the award on behalf of the bank, its Head of SME Segment, Mr Ayokunnumi Abraham, described the recognition as a strong endorsement of the organisation’s commitment to supporting small and medium-sized businesses.
“We are honoured to receive this recognition, which reflects Union Bank’s continued commitment to helping SMEs grow by making banking simpler, faster, and more accessible.
“Through enhancements to our specialised platforms such as Union360, we have meaningfully reduced the time it takes for businesses to come on board and begin transacting.
“These improvements have shortened onboarding, increased digital adoption among our SME customers, and supported the acquisition of new business clients. Our focus remains on delivering practical solutions that help Nigerian businesses thrive,” he stated.
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