Banking

Moody’s Sees Vulnerabilities in This Tier Two Bank’s Asset Quality

Published

5 years ago

17/12/2019

Modupe Gbadeyanka

**Says GTBank, Zenith Bank Strong to Withstand Shocks

By Modupe Gbadeyanka

Moody’s Investors Service has announced the downward review of the outlook of Sterling Bank Plc to negative from stable following the negative outlook on Nigeria’s government issuer rating.

In a statement issued this month, the rating agency said the lowering of Nigeria’s rating affects the bank’s credit profile as well as resulting in a lower ability to support the b3 BCA, which it said reflects Sterling Bank’s vulnerabilities in asset quality because of high single-name and sector concentration risks.

According to Moody’s, the lender has a large exposure to government debt securities and loans at 275 percent of its tangible common equity as of June 2019, noting that the company will likely be more exposed to negative pressure on its revenue generation capacity and its asset risk than its top-tier local peers due to its relatively small size and client base.

It was further stated that the b3 BCA shows bank’s modest capital levels, especially in light of high asset risks and high foreign-currency loans, stressing that these challenges are balanced against its deposit-based funding profile and stable local-currency liquidity, stating that the “local currency deposit rating is B2 while the local currency national scale rating is A2.ng.”

Also, commenting on other banks, Moody’s said Union Bank of Nigeria, FCMB and Fidelity Bank will likely be more exposed to negative pressure on their revenue generation capacity and asset quality than their top-tier local peers due to its relatively small size and client base.

For Union Bank, it said the b3 BCA reflects its high asset risks and low coverage of NPLs by provisions, which increases the risk of capital erosion in case of loan losses.

It further said this shows weak efficiency and moderate profitability; and still-tight, although improving, foreign-currency funding position, saying these challenges are moderated by the company’s stable deposit-based funding profile, particularly in local currency.

On the part of FCMB, it was stated that the b3 BCA reflects its elevated credit risks stemming from high single-name and sector concentrations; and relatively modest profitability levels compared with those of its top-tier local peers, noting that these challenges are balanced against its robust levels of tangible common equity compared with that of its global peers, stable deposit-based funding structure, and robust local-currency liquidity buffers.

For Fidelity Bank, the rating firm said the b3 BCA shows the lender’s relatively tight funding conditions, as reflected by its high, although improving, loan-to-customer deposit ratio; and high proportion of foreign-currency loans.

It said these challenges are mitigated by the lender’s relatively high provision coverage of NPLs; and solid capital buffers with a tangible common equity-to-risk-weighted asset that is comparable to global peers, although the bank’s capital buffer against the regulatory requirement is small.

But for Guaranty Trust Bank, Moody’s said b2 BCA reflects its resilient earnings generation capacity and robust capital buffers; high liquidity buffers and its predominantly deposit funded balance sheet; and robust franchise, which allows the bank to earn relatively higher margins and relatively low credit costs.

Also, it said Zenith Bank’s BCA of b2 reflects its resilient earnings generating capacity and robust capital buffers, which together provide a buffer to withstand asset-quality deterioration; high liquidity buffers and a predominantly deposit-funded balance sheet; and robust franchise, which allows it to attract inexpensive deposits, relative to other Nigerian banks, adding that “These strengths are moderated by the bank’s high proportion of more confidence-sensitive corporate deposits versus retail deposit.”

For UBA, it stated that the b2 BCA shows moderate asset risk profile, supported by its relatively more diversified loan book than that of its local peers; resilient profitability, which supports its capital buffers; and predominantly deposit-funded balance sheet, which is supported by a solid pan-African franchise, and strong local-currency liquidity buffers.

“These strengths are counterbalanced by UBA’s rising, although still moderate, dependence on confidence-sensitive funding,” the statement from Moody’s said.

Commenting on the b3 BCA of First Bank, the rating agency said it reflects the lender’s still-high stock of NPLs, although reducing, and moderate capital buffers, emphasising that these challenges are moderated by the bank’s resilient pre-provision profitability and stable funding profile, which is supported by a large stock of liquid assets.

Banking

Zenith Bank Proposes N4 Final Dividend as 2024 Profit Soars Above N1trn

Published

4 days ago

27/03/2025

Dipo Olowookere

By Dipo Olowookere

A final dividend of N4 per share has been proposed by the board of Zenith Bank Plc for the 2024 financial year, a statement from the lender has revealed.

The cash reward, which reached N5 per share for the year because of an interim dividend of N1 paid earlier in the year, is coming after the company improved its post-tax profit to N1.03 trillion from N676.9 billion as the profit before tax (PBT) increased to N1.32 trillion in 2024 from N796.0 billion in 2023, driven by a combination of top-line expansion and efficient treasury portfolio management.

As for the top-line of the results analysed by Business Post, the financial institution grew its gross earnings by 86 per cent on a year-on-year basis to N3.97 trillion from N2.13 trillion in the previous accounting year, driven by a 138 per cent rise in interest income, supported by investment in high-yield government securities, and growth in its loan book.

It was observed that net interest income jumped by 135 per cent to N1.7 trillion from N736 billion in 2023, reinforcing the bank’s strong core banking performance and ability to grow earnings despite macroeconomic headwinds.

Also, non-interest income grew by 20 per cent to N1.1 trillion from N919 billion, with total assets expanding by 47 per cent to N30 trillion in the period under review from N20 trillion a year earlier, supported by a strong liquidity position and effective balance sheet management.

In addition, customer deposits surged by 45 per cent to N22 trillion from N15 trillion, reflecting a historically strong corporate deposits portfolio and a sustained increase in retail deposits.

The increase in retail deposits was buoyed by customer acquisition and the company’s strategic focus on low-cost funding.

In the year, Return on Average Equity (ROAE) declined to 32.5 per cent on the back of the injection of new capital, while Return on Average Assets (ROAA) remained unchanged at 4.1 per cent.

Zenith Bank’s cost-to-income increased slightly to 38.9 per cent from 36.1 per cent despite inflationary pressures, while the Non-Performing Loan (NPL) ratio stood at 4.7 per cent, with a coverage ratio of 223 per cent, underscoring the bank’s prudent risk management and commitment to maintaining a resilient loan book, ensuring stability and confidence in its operations.

“This year’s performance underscores our unwavering commitment to innovation and customer-centric solutions. We will also remain focused on deepening financial inclusion, enhancing service delivery, and creating value for our customers and stakeholders,” the chief executive of Zenith Bank, Ms Adaora Umeoji, stated.

Banking

Moniepoint to Enter Remittances Market Soon

Published

4 days ago

26/03/2025

Adedapo Adesanya

By Adedapo Adesanya

Nigerian fintech unicorn, Moniepoint, is reportedly making an attempt to play in the highly competitive remittances market to serve Nigeria, with the pilot set to commence with the United Kingdom.

According to The Condia, formerly known as Benjamin Dada, the nine-year old firm is currently planning on launching its remittance product that will go by the name: MonieWorld.

The tech publication reported that the app is currently in beta phase ahead of a planned public launch.

Making a play for remittances will see Moniepoint compete with other players like Lemfi, JuicyWay, Africhange, and Kuda, among others.

One core attraction of remittances products is offering comparatively cheaper alternatives to win customers over, particularly at a time when the Nigerian foreign exchange market is experiencing volatility.

To be able to open a MonieWorld UK account, users will be required to be UK residents, aged 18 or older, with a valid mobile number.

It comes at a time the Central Bank of Nigeria (CBN) has set its sight on $1 billion in remittances monthly.

Last year, CBN Governor, Mr Yemi Cardoso, said Nigerians abroad were keen to invest and have already more than doubled the remittances they send home since the Bola Tinubu administration embarked upon monetary reforms in 2023.

According to available numbers, diaspora remittances through international money transfer operators (IMTOs) reached $4.22 billion between January and October 2024.

The figure is 61 percent or $2.62 billion higher than the amount recorded during the same period in 2023.

Moniepoint processes about N30 trillion ($22 billion) monthly and will see further increase as the company continues to serve Nigeria.

Recall that in October 2024 Moniepoint achieved a “unicorn” status after securing $110 million in funding from investors, including Google and London-based private equity firm Development Partners International.

The capital raised will be used to accelerate Moniepoint’s growth across Africa, building an all-in-one, seamlessly integrated platform for African businesses of all sizes, the company had noted at that time.

Now, it appears that one of its growth plans include capturing its share of the remittances market.

Banking

131 Women Win N11m in Wema Bank 5 for 5 Promo

Published

5 days ago

25/03/2025

Modupe Gbadeyanka

By Modupe Gbadeyanka

The sum of N11 million has been won by at least 131 women in the 5 for 5 promo of Wema Bank Plc at a highly anticipated women’s month draw held on Friday, March 21, 2025, in Aba, Nigeria.

Among the winners were Ogechukwu Patience Ani from Aba, Vanessa Chiamaka Ogbonna from Lagos and Mubarakaht Abisola Alowonle from Bodija, Ibadan, all of whom won N1 million.

Others included eight individual domiciliary account holders who won N250,000 each, 40 women who won 100,000 each and 80 who won N25,000 each.

The women’s month draw closed out excellently, financially empowering Nigerian women from across the country as the women’s month draws to an end.

“Wema Bank was founded on the precept of empowerment. Since 1945, we have carried on this legacy, promoting financial inclusion for the indigenous people of Nigeria and empowering our people with the resources they need to thrive. But for us, this journey has not been a one size fits all,” the chief executive of Wema Bank, Mr Moruf Oseni, stated.

“In recognition of the gap that exists in gender equality, we have been intentional about creating tailored opportunities for women through our women-focused proposition, SARA by Wema, and our vast range of customised solutions and initiatives designed for women.

“We have simply leveraged the 5 for 5 Promo as one more way of supporting our women this women’s month. For us, it’s all about impact, and we are delighted to have put smiles on the faces of Nigerian women from all across the country. That is the joy for us,” he added.

“To the 131 women who emerged winners, I say hearty congratulations to you, and I take this opportunity to also thank you for choosing Wema Bank and continuing to trust our services. We do not take it for granted.

“For 80 years, we have pulled all stops to deliver the best quality of impactful banking to the people of Nigeria, and I boldly reaffirm that we will never relent in providing a rewarding, fulfilling and empowering banking experience for every customer of Wema Bank,” Mr Oseni concluded.

Introduced in 2021, the 5 for 5 promo is Wema Bank’s dedicated avenue for rewarding its customers for their active loyalty to the brand, its products, and its offerings.

For 3 seasons, the lender has disbursed over N150 million to 2,378 Nigerians across the six geopolitical zones in Nigeria, returning bigger than ever for season 4 with a N135 million cash prize.

Since the season kicked off in October 2024, Wema Bank has disbursed over N50 million to its customers across daily, weekly and monthly draws.

For the 5th monthly draw in March, the bank took a thoughtful step, disbursing the total N11 million cash prize to an all-women pool of winners.