E-Financial
Agusto & Co. Assigns an “A+” Rating to Coronation Merchant Bank
Nigeria’s first credit Rating Agency and a pan African leader in credit reports, Agusto & Co. limited whose strong credibility presence and ratings are globally accepted in Nigeria, and across the globe has just assigned an “A+” rating to Coronation Merchant Bank Limited.
The rating assigned to Coronation Merchant Bank Limited (‘Coronation MB’ or ‘the Bank’) is underpinned by good capitalisation, healthy asset quality, acceptable profitability and an experienced management team with a clear succession plan.
The rating is however constrained by concentration in the loan book, volatile customer deposits and high funding costs.
Since the transition to a merchant bank in 2015, Coronation MB has focused on trade transactions and working capital financing for risk asset creation. Notwithstanding, the short tenured and self- liquidating nature of the transactions, the loan book has continued on an upward trajectory, expanding by 68.5% to ₦54.3 billion in 2018.
This was in contrast to the stagnant banking industry’s loan book and the 1.9% GDP growth in 2018.
A further 26.5% loan growth is projected in 2019, as part of the strategy to become Nigeria’s foremost international trade finance solution provider.
While we acknowledge the low base of the loan book, we believe the loan growth is high compared to the projected GDP growth of 2.5% for the year. In addition, we consider the macro economy to still be at a vulnerable state.
Despite the harsh operating terrain, Nigerian banks have been resilient. Merchant banks in particular have leveraged the malleability of their license to optimise income. Through their investment banking divisions, advisory services are deployed to provide bespoke products for corporates.
Amidst intense competition from the large commercial banks, constraining operational guidelines and increased focus on the investment banking/asset management, profitability of the segment however compares favourably against the Industry average.
Nevertheless, we believe merchant banks will remain a small segment of the Industry based on restriction on liability generation and intense competition from established commercial banks.
E-Financial
Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme
“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.
MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.
Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.
The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.
The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.
E-Financial
CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering
Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.
The inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.
In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN, disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.
“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.
The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.
However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.
Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.
Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.
E-Financial
CBN Urges Banks to Expedite Action on Recapitalisation
Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.
Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.
The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.
Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.
“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”
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