Coronation Merchant Bank has received a Fitch Ratings upgrade of its Long-Term Issuer Default Rating (IDR) to ‘B-‘ from ‘CC’ and its Viability Rating (VR) to ‘b-‘ from ‘cc’.
The bank’s National Long-Term Rating has also been upgraded to ‘BBB-(nga)’ from ‘B+(nga)’, with the Outlooks on the Long-Term IDR and National Long-Term Rating rated Stable.
This upgrade reflects the improvement in the bank’s capital position, following the completion of a rights issue and the sale of foreign currency-denominated equity investments.
According to Fitch, the substantial upgrade reflects the agency’s view that funding instability risks have receded, due to the strengthening of Coronation Merchant Bank’s capital base. This assessment is also attributed to an improvement in the bank’s core profitability, aided by the softening of the Cash Reserve Ratio (CRR) regime for merchant banks.
The rating agency further remarked, “Coronation Merchant Bank Limited’s Issuer Default Rating (IDR) is driven by its standalone creditworthiness, as expressed by its VR of ‘b-’. The Viability Rating (VR) balances the concentration of Coronation Merchant Bank’s operations in Nigeria’s challenging operating environment, a niche franchise and business model, high credit concentrations, moderate capitalization and its reliance on short-term wholesale funding against good asset quality metrics.”
Fitch also highlighted the bank’s strong asset quality metrics, noting that “despite challenging macroeconomic conditions, Coronation Merchant Bank has recorded no impaired loans since converting to a merchant bank in 2015, reflecting its prudent underwriting standards and risk controls, and the lower-risk nature of its trade finance loans.”
Commenting on the upgrade, Paul Abiagam, deputy managing director of Coronation Merchant Bank, said: “Our unique 4-step upgrade in both ratings by Fitch is a testament to the progress the board & management have made in directing and executing strategic initiatives that have effectively reinforced our financial stability and operational resilience. It reflects the hard work and dedication of our entire team and underscores our shared devotion to maintain high standards of financial management and deliver exceptional value to our stakeholders.”
Inspired by founder, Aigboje Aig-Imoukhuede’s vision and leadership, Coronation Merchant Bank remains focused on leading Africa’s merchant banking subsector. Despite sectoral headwinds and a challenging economic environment, the bank delivered an exponential increase in profit before tax (PBT), to N3.48 billion in the 2023 financial year, maintaining a triple digit quarter-on-quarter growth to N1.40 billion in Q1 2024.
This performance also reflects the successful efforts of the board of directors led by chairman, Tunde Folawiyo to strengthen the bank’s executive leadership team with strategic appointments, including Paul Abiagam, deputy managing director; Arini Awotunde, chief financial officer, and Saheed Alamutu, chief risk officer, among others.
