Coronation Merchant Bank Achieves Major Fitch Rating Upgrade From ‘CC’ To ‘B-’

In a remarkable turn of events, Coronation Merchant Bank has received a significant upgrade from Fitch Ratings, marking a pivotal moment in the Bank’s growth and stability.

Fitch has elevated the Bank’s Long-Term Issuer Default Rating (IDR) from ‘CC’ to ‘B-‘, and its Viability Rating (VR) from ‘cc’ to ‘b-‘. Additionally, the Bank’s National Long-Term Rating has risen to ‘BBB-(nga)’ from ‘B+(nga)’, with both ratings maintaining a stable outlook.

This upgrade comes as a testament to Coronation Merchant Bank’s strengthened capital position, achieved through a successful rights issue and the sale of foreign currency-denominated equity investments. According to Fitch, these moves have mitigated funding instability risks, bolstered by an improved capital base and core profitability, supported by the easing of the Cash Reserve Ratio (CRR) regime for merchant banks.

Fitch said, “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 capitalisation and its reliance on short-term wholesale funding against good asset quality metrics.”

The rating agency also noted 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.”

Deputy Managing Director of Coronation Merchant Bank, Paul Abiagam, attributed this achievement to the strategic initiatives and collective efforts of the Bank’s Board and Management.

“Our unique 4-step upgrade in both ratings by Fitch is a testament to the progress we’ve made in reinforcing our financial stability and operational resilience. This success reflects the dedication of our entire team and our commitment to high standards of financial management,” Abiagam stated.

Under the leadership of Founder Aigboje Aig-Imoukhuede, Coronation Merchant Bank continues to lead Africa’s merchant banking subsector. Despite facing sectoral headwinds and a challenging economic environment, the Bank achieved an impressive Profit Before Tax (PBT) of ₦3.48 billion in the 2023 financial year, with a further increase to ₦1.40 billion in Q1 2024.

The Bank’s enhanced performance can also be credited to strategic appointments within its executive leadership, including Deputy Managing Director Paul Abiagam, Chief Financial Officer Arini Awotunde, and Chief Risk Officer Saheed Alamutu. These additions have driven the Bank’s growth while maintaining excellence in risk management and corporate governance.

Ozioma Samuel-Ugwuezi

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