Abubakar Jimoh: Building Coronation Merchant Bank Ltd into Africa’s premier investment bank

For Abubakar Jimoh, his vision is to make Coronation Merchant Bank Africa’s premier investment bank, an idea which was once a dream but now gradually becoming a reality.

In Nigeria, the investment banking landscape has undergone unique changes in the past three years with new players emerging in practically every segment of the market.

Beyond winning Investment Bank of the Year for the second year running at Businessday Banks & Other Financial Institutions Award (BAFI), the vision of Abubakar Jimoh CEO of Coronation Merchant bank is very clear. From the beginning, he wanted an institution beyond just investment banking. He wanted a bank that can offer trade, corporate banking, private banking or wealth management and global markets/ treasury services to clients across Africa.

Abubakar Jimoh was a pioneer staff member of Express Discount Limited, where he rose to Head of Trading. He later held various positions at RBC Financial Group (Royal Bank of Canada). He led the transformation of Associated Discount House from a failing discount house to a merchant bank (Coronation Merchant Bank Group) with an ‘A’ rating from Agusto. He was on the Board of Shelter Afrique between 2012 and 2013.

As an investment bank, Abubakar Jimoh wants Coronation Merchant Bank to grow the non-interest income revenues, such as investment banking, asset management, and equity brokerage, which in the last three years have increased from about 4percnt of its income to 12percent.

As a CEO with more than 24 years of experience in various capacities, covering client relationship management, treasury, market risk, and credit risk management, operational risk management, project management, and portfolio management; Abubakar Jimoh’s key focus is bridging the annual $170billion infrastructure gap that exists in Africa as well as facilitating inter-continental trade.

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“Our strategy has evolved over the years. Initially, our focus was on providing specialised financial services to high-end corporates and governments across Africa. Today, our growth strategy is rooted in building capabilities to address growing clients’ needs, creating a workplace atmosphere that attracts and retains talent, and growing efficient architectures by expanding our investment in technology,” Abubakar Jimoh said in an interview with Africa Business Magazine.

For Nigerian businesses, Jimoh believes that funding at times cannot be obtained through borrowing as longterm, renewable capital is often required however he also thinks the institutions that can help raise this long-term capital are typically merchant banks.

“We will become closer to our customers, giving us a competitive edge. As for the macroeconomic outlook, with the election behind us, we will see money coming in that was waiting on the sidelines, and investment levels will go up. There are big fund restructurings happening, and it will be a great time to trade assets and capitalize on private equity investments in Nigeria,” Abubakar Jimoh said.

Financial performance of the bank under Abubakar Jimoh

In the first quarter of 2019, When we look at where we stand today, our company is stronger, simpler, and better positioned to deliver long-term value to our stakeholders, thanks to the straightforward way in which we serve our customers and clients Coronation Merchant Bank Limited released its 2018 Full Year Results to stakeholders in which the bank posted a Profit Before Tax (PBT) of N5.3billion compared to N5.1billion recorded in December 2017 while Shareholders’ Funds increased to N31.5billion as at December 2018 compared to N29.5billion recorded in December 2017. Total Assets also grew 63percent from N136billion in 2017 to N223billion

Commenting on the result, Abubakar Jimoh said despite the difficult operating environment, the company recorded modest growth across most financial indices. “The growth we recorded in our profitability and capital position is a testament to the strength of our business model and the commitment of our people.”

Key Ratios show the bank’s Capital Adequacy Ratio of 19.7percent as at December 2018 compared to 24.8percent recorded in December 2017 while Loan to Deposit Ratio stood at 43.4percent as at December 2018 compared to 42.2 percent recorded in December 2017. Non-performing Loan Ratio remained at zero percent just like the corresponding period of the previous year.

Cost to Income ratio increased to 53.5percent as of December 2018 compared to 52.6 percent in 2017. However, Net interest margin was 5.1 percent as at December 2018 compared to 7.7percent in December 2017. Earnings Per Share (EPS) was 90.62 kobo in December 2018 compared to 94.09 kobo recorded in December 2017.

Dividend Per Share (DPS) stood at 33 kobo in December 2018 (December 2017: 30kobo); while Return on Equity stood at 15.01percent as at December 2018 (December 2017: 17.17percent).

Loans & Advances to customers went up 70percent to N54.8billion as at December 2018 from N32.3billion in December 2017. Customer Deposits increased by 65percent to N126.2billion as at December 2018 from N76.4 billion recorded in the same period last year.

The Group maximized opportunities in its core business to deliver stable and sustainable revenue growing the top-line revenue by 10percent compared to 2017.

“When we look at where we stand today, our company is stronger, simpler, and better positioned to deliver long-term value to our stakeholders, thanks to the straightforward way in which we serve our customers and clients. As a platform for improving lives, our aim is to assist our customers to identify growth opportunities, harness these opportunities and in the process, enable businesses thrive, economies grow, and ultimately, help organizations fulfil their hopes and realise their ambitions”, Jimoh noted.

Earning assets grew significantly by 70percent year- on- year to cushion the huge gap from reduced market-driven decline in yield. This resulted in a slight decline in net interest income by 5percent to achieve N7.6billion, against N8billion the previous year.

There was an increase in foreign exchange and fixed income trading volumes, loan disbursement, and echannel transactions, which saw the bank’s non-interest income increase by 46percent year on year to achieve N4.1billion compared to N2.8 billion in 2017.

The impact of the adoption of International Financial Reporting Standard (IFRS) 9 increased the bank’s cost of risk marginally from zero percent to 0.03percent with all its risk assets in the stage 1 classification.

According to Jimoh, as a Group, the bank has continued to expand the sector reach, meeting customers’ financing needs by offering products tailor-made to their varied needs. In 2018, he says the bank deliberately increased exposures to high-quality obligors in Agriculture, Manufacturing and Oil & Gas sectors who fall within its risk acceptance criteria. The quality and efficacy of the bank’s growth strategy are according to him, evidenced by its zero NPL ratios which have been maintained for the third year running. In addition to this, its dollar asset base grew by over 100percent driven largely by self-liquidating trade finance transactions that are well managed, in line with the bank’s risk management framework.

Furthermore, the Bank’s commercial paper product that was launched this year helped to provide a relatively stable funding base to support its growth. Customer Deposit grew by over 65percent from N76billion in 2017 to N126billion in 2018. The positive result recorded by the commercial paper is an attestation of the Bank’s strength in the capital market and a reflection of its growing level of investor confidence.