Fitch upgrades Coronation Merchant Bank ratings

International credit rating agency, Fitch Ratings, has upgraded Coronation Merchant Bank’s long-term issuer default rating to ‘B-’ from ‘CC’ and its viability rating to ‘b-’ from ‘cc’.

Also, the bank’s national long-term rating has been upgraded to ‘BBB-(nga)’ from ‘B+(nga)’, with the outlooks on the long-term IDR and national long-term rating rated stable.

A statement from the bank on Monday said that the significant upgrade indicated 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 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 regime for merchant banks.

The rating agency said, “Coronation Merchant Bank Limited’s issuer default rating is driven by its standalone creditworthiness, as expressed by its VR of ‘b-’. The Viability Rating 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 capitalisation and its reliance on short-term wholesale funding against good asset quality metrics.”

In addition, Fitch highlighted the bank’s strong asset quality metrics, noting that despite challenging macroeconomic conditions, Coronation Merchant Bank had 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, Deputy Managing Director of Coronation Merchant Bank, Paul Abiagam, said, “Our unique 4-step upgrade in both ratings by Fitch is a testament to the progress the board and 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.”

Coronation Merchant Bank, founded by the banking mogul, Aigboje Aig-Imoukhuede recorded a profit before tax of N3.48bn in 2023 and maintained a triple-digit quarter-on quarter growth to N1.40bn in Q1 2024.

The better-than-expected performance also reflects the successful efforts of the bank’s board of directors led by Mr Tunde Folawiyo to strengthen its executive leadership team with strategic appointments, including deputy managing director, Paul Abiagam; chief financial officer, Arini Awotunde; chief risk officer, Saheed Alamutu, among others.

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Fitch upgrades Coronation Merchant Bank ratings:

International credit rating agency, Fitch Ratings, has…