Banking
Nova Merchant Bank Risks Negative Rating Action—GCR
By Dipo Olowookere
Local rating agency, Global Credit Ratings (GCR) has said Nova Merchant Bank Limited may have a negative rating action on the back of a sustained weak competitive position.
GCR, in a statement on Friday, disclosed that another reason for a possible negative action could be the inability of management to successfully execute the unveiled strategic plan, as well as material deterioration in key performance metrics (financial, capitalisation, asset quality, and liquidity metrics).
However, it said for now, it has affirmed the national scale ratings assigned to Nova of BBB-(NG) and A3(NG) in the long term and short term respectively; with the outlook accorded as stable.
GCR explained that the ratings reflect Nova’s evolving status and its limited track record of less than three years.
The agency noted that while it takes cognisance of the bank’s relatively improved financial performance and progress with the implementation of its strategic plan, the accorded ratings are, however, constrained by the current challenging macroeconomic environment and uncertainties in the Nigerian banking regulatory landscape.
According to the statement, Nova’s capitalisation is considered adequate for its current risk level and regulatory requirement.
In the 2019 financial year, its shareholders’ funds grew by 11.1 percent to N19.6 billion, buttressed by internal capital generation.
In addition, accelerated growth in risk-weighted assets saw the bank’s risk-weighted capital adequacy ratio (CAR) moderate to 54.3 percent at from 228.7 percent in FY18, albeit headroom for further expansion in risk asset base remained strong based on the regulatory minimum CAR of 10 percent. As such, GCR said it expects the bank’s CAR to moderate further as lending activities are intensified.
The statement said Nova displayed a sound liquidity profile at FY19, with key liquidity metrics comparing favourably with regulatory requirements.
Specifically, statutory liquidity ratio ranged from 55.8 percent to 200.4 percent throughout FY19, against the regulatory minimum of 20 percent.
Furthermore, the contractual matching of the bank’s assets and liabilities maturities at the balance sheet date reflects liquidity buffer across all maturity bands, with cumulative liquidity buffer amounting to N18.7 billion at FY19.
Nova’s asset quality metrics remained strong, with nil non-performing loans recorded from inception to date. Cognisance is taken of the fact that the bank recently began to build up its loan book, albeit total loan exposures remain minimal relative to peers.
The bank’s key profitability indicator improved in FY19, with pre-tax profit increasing by a sizeable 57.9 percent to N1.5 billion, buoyed by rapid growth in loan book as well as increased non-interest income.
While operating expenses rose by 32.3 percent, an outpaced growth (45.9 percent) in total operating income, saw the cost to income ratio decline to 54.1 percent in FY19 (FY18: 59.6 percent).
Overall, return on average equity strengthened to 8.9 percent (FY18: 6.7 percent), while return on average assets declined to 3.8 percent (FY18: 5.4 percent) due to a firmer growth in total assets.
By Modupe Gbadeyanka
About N3.6 trillion has been repaid to the Central Bank of Nigeria (CBN) by the Asset Management Corporation of Nigeria (AMCON) since its inception in 2010.
This information was revealed by the chief executive of AMCON, Mr Gbenga Alade, during a media parley to update the press on the activities of the agency.
Mr Alade said at the moment, the organisation still owes the central bank about N3 trillion for toxic assets of banks in the country.
He praised the organisation for its asset recovery drive, stressing that when compared with others across the world, Nigeria has done well.
“It is important to stress that the corporation has done tremendously well, especially when compared to other notable government-owned Asset Management Corporations around the world.
“Based on the balance at purchase, AMCON outperformed other Asset Management Corporations all over the world by achieving over 87 per cent in recoveries despite the unique challenges associated with debt recovery in Nigeria.
“The Malaysian Danaharta, which is adjudged one of the best performing Asset Management Corporation’s, only achieved 58 per cent. The Chinese Asset Management Corporation, despite its stricter laws, achieved just 33 per cent.
“Only the Korean Asset Management Corporation (KAMCO), South Korea, has achieved more recoveries than AMCON, with about 100 per cent. This was due to their brute force with which they chased the obligors.
“Despite KAMCO’s recovery records, the agency is still operational to date with slight realignments in its mandate.
“Other noted Asset Management Corporations that have transitioned into a perpetual institution of the various governments include, China Asset Management Company, Federal Deposit Insurance Corporation (FDIC) USA, and KFW Germany.
“So, gentlemen, without sounding immodest, AMCON has done well, and we will not relent until all the outstanding debts are fully realized,” Mr Alade stated.
On the financial performance of AMCON, he said last year, the firm posted a revenue of N156.25 billion and operating expenses of N29.04 billion, while for the 2025 fiscal year should be a revenue of N215.15 billion and operating expenses of N29.06 billion.
By Modupe Gbadeyanka
One of the non-interest banks in Nigeria, The Alternative Bank (AltBank), has opened a new branch in Effurun, Delta State.
The new office will serve the Edo-Delta region and provide purposeful banking and real financial empowerment for individuals, entrepreneurs, and businesses, a statement from the firm stated.
The lender disclosed that the Effurun branch is a bold move in its mission to reshape banking in Nigeria.
The launch was graced by key dignitaries, including the Ovie of Uvwie Kingdom, Emmanuel Ekemejewa Sideso Abe I; the Chairman of Uvwie Local Government, Anthony O. Ofoni, represented his vice, Andrew Agagbo; and the Special Adviser to the Governor of Delta State on Community Development, Mr Ernest Airoboyi; amongst others.
The Divisional Head for South at The Alternative Bank, Mr Chukwuemeka Agada, emphasised the institution’s commitment to Warri and its surrounding communities.
“By establishing a presence here, we are initiating a transformation in the way banking serves the people of Delta. Our purpose-driven approach ensures that customers’ financial goals are not just met but exceeded,” he stated.
“This branch represents our pledge to empower Warri’s dynamic businesses and families, providing them with the tools to grow without compromise,” Mr Agada added.
“We understand the heartbeat of this community, and we are excited to integrate our bank into the fabric of this dynamic region,” he stated further.
On his part, the representative of the Ovie, Mr Samuel Eshenake, challenged the bank to facilitate development and employment within the Effurun community.
The Regional Head for Edo/Delta at The Alternative Bank, Mr Akanni Owolabi, embraced this challenge, pledging that the bank will work sustainably to drive local commerce.
“At The Alternative Bank, we are committed to being an active partner in the development of Effurun. We see this branch as a catalyst for creating opportunities, driving employment, and supporting the growth of local businesses.
“Our mission is to empower this community, ensuring that every step forward is one of progress, prosperity, and shared success.”
By Aduragbemi Omiyale
A partnership aimed to enable seamless, real-time and secure transactions for cardholders across Africa and the rest of the world has been entered into by Payattitude and PAPSSCARD, the card scheme initiative of the Pan-African Payment & Settlement System (PAPSS).
The collaboration will allow Payattitude cards issued by banks and other deposit-taking institutions to be co-branded with PAPSSCARD, Discover, Diners and Pulse for acceptance across their networks in Nigeria, Africa and worldwide.
As an initiative of the African Export-Import Bank (Afreximbank) and a key financial infrastructure supporting the African Continental Free Trade Area (AfCFTA), the PAPSSCARD scheme will facilitate instant cross-border payments in local currencies.
“This partnership reflects our commitment to cross-enterprise alliances and enabling inclusive, efficient, and borderless payments across Africa and the world
“With Payattitude, Nigerian cardholders and financial institutions can now enjoy the benefits of a Nigerian card that can be used worldwide,” a director at Payattitude, Dr Agada Apochi, said.
The acting chief executive of PAPSSCARD, Mr John Bosco Sebabi, said the aim is “to connect African payment ecosystems, reduce the cost and inefficiencies of cross-border payments, and strengthen African sovereignty over payments infrastructure.
“Collaborating with Payattitude, a key innovator in Nigeria’s payment space, represents a significant step towards a more unified African payment landscape.”
The chief executive of PAPSS, Mr Mike Ogbalu, said, “By bringing together PAPSSCARD’s robust cross-border payment capabilities with Payattitude’s leadership in the Nigerian digital payments, we are taking tangible steps toward building a single African market where individuals and businesses can transact easily and securely, both within and beyond Africa.”
Payattitude is the first-in-kind Nigerian Payment Scheme to pioneer multibank App and USSD Code *569#.
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