Connect with us
nairametrics
UBA ads

Financial Services

S&P Global affirms AfDB’s AAA rating, projects stable outlook

The Bank has a very strong financial risk profile, capital adequacy, liquidity, extraordinary shareholder support.

Published

on

Africa Development Bank. AfDB develops Index to aid women empowerment , African Development Bank awards $1.1 million to boost food production in Africa , AFDB increases capital to $208 billion in bid to secure Africa’s future , African Investment Forum: AfDB eye $67 billion deals , ECOWAS backs Adewunmi Adesina’s re-election as AfDB election nears , AfDB bows to pressure from U.S., orders an independent probe of Akinwumi Adesina

S&P Global. a rating agency, has affirmed its ‘AAA/A-1+’ long- and short-term issuer credit assessment of the African Development Bank (AfDB) with a stable outlook.

The agency positively assessed the bank’s very strong financial risk profile, very strong capital adequacy, strong funding and liquidity, extraordinary shareholder support and adequacy of its governance and management.

UBA ADS

This was disclosed in a statement issued by the development bank on Monday. The agency noted the bank’s $115 billion capital increase, approved by shareholders in October 2019, and the replenishment to the African Development Fund, the Bank’s concessional window, in December 2019.

READ MORE: World Bank’s statement on Africa’s debt status is inaccurate, misleading, AfDB replies

It said, “We are therefore affirming our ‘AAA’ long-term issuer credit rating on the AfDB. The stable outlook reflects our expectation that, over the next two years, AfDB will prudently manage its capital while maintaining solid levels of high-quality liquidity assets and robust funding.”

GTBank 728 x 90

According to S&P, the shareholders are expected to remain supportive by providing timely capital payments, as the bank will continue to benefit from preferred creditor treatment (PCT), and prudently manage growth in private-sector lending, in a way that’s aligned with its mandate.

READ MORE: AfDB board denies asking Adesina to step down, as Obasanjo says the bank risks being hijacked

The rating agency’s report added that the “AfDB will play a key role supporting the region, particularly in the context of COVID-19. The institution approved an up to $10 billion relief package for 2020, of which $6.9 billion will be financed by AfDB and the remainder through its concessional lending window.

onebank728 x 90

President, AfDB, Akinwumi Adesina, said: “We are delighted with and welcome S&P Global’s decision to affirm the Bank’s AAA/A-1+ rating. It reflects the Bank’s very strong financial position and risk management, as well as our sound governance. We will continue to maintain these standards, with the strong support of all our shareholders, as we deliver much needed financial, knowledge and policy support to our regional member countries during and after this period of the COVID-19 pandemic.”

Download the Nairametrics News App

What you need to know about AfDB Group
The African Development Bank Group is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).

app
GTBank 728 x 90

Patricia

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Financial Services

CBN expands scope of regional banks in Nigeria, gives compliance timeframe

The aim of this directive is to expand the reach of the regional banks across the country, the CBN said.

Published

on

Regional Banks

The Central Bank of Nigeria (CBN) has expanded the scope of regional banks in the country, by requiring them to open branches in at least one additional geopolitical zone outside of the existing geopolitical zones where their operating licenses cover.

A circular that was issued earlier this week by the apex bank said this new directive is in accordance with “section 8 (g) of the CBN Scope, Conditions & Minimum Standards for Commercial Banks Regulations no [1] 2010 as revised on September 4, 2019.” 

UBA ADS

The new directive took effect on Friday, June 26, 2020. In other words, all the regional banks are expected to have become aware of this development since then. They now have a timeframe of six months to establish their presence in the geopolitical zones outside of where they currently operate.

It should be noted that prior to this time, regional banks in the country typically operated in at least two geopolitical zones of the federation. However, in line with the new expansion, the CBN shall now prescribe an additional geopolitical zone for each of these regional banks, thereby making the coverage area three geopolitical zones per regional bank.

Meanwhile, the CBN said the aim of this directive is to expand the reach of the regional banks across the country, whilst ultimately promoting financial inclusion. Note also that the new directive affects all regional banks, both the ones engaged in commercial banking and non-interest banking. Some part of the circular said:

GTBank 728 x 90

“Effective the date of this circular, all banks with regional authorisation shall be required to operate from one additional geopolitical zone as may be prescribed for each institution by the CBN, without prejudice to the existing requirement of the minimum of two (2) geopolitical zones of the federation. The essence is to promote spread and balance of the regional banks across the country.

“The compliance timeline to establish operational footprint at the advised zone shall not exceed six (6) months from the issuance of the regulatory advice to each regional bank by the CBN.”

onebank728 x 90
Patricia
Continue Reading

FEATURED

Banks’ stakeholders express 4 main concerns bothering the sector right now

Banks are more concerned about the arbitrary nature and lack of understanding of the CRR debits.

Published

on

Banks' stakeholders express 4 main concerns bothering the sector right now, CBN, MARKET UPDATE: CBN’s historic agriculture lending; Is it yielding the desired results? 

Stakeholders in the Nigerian banking sector have raised concerns over four main issues that are threatening their investments at the moment.

These concerns range from the perceived “unorthodox monetary policy” moves of the apex bank, to FX liquidity issues, and of course the negative impacts of the COVID-19 pandemic.

UBA ADS

These concerns were raised by the representative of some of the country’s top banks (Zenith Bank Plc, FBN Holdings Plc, United Bank for Africa Plc, Guaranty Trust Bank Plc, and Stanbic IBTC Holdings Plc) who recently attended Standard Chartered Bank’s 2020 Africa Investor’s Conference.

READ MORE: Bank Hold-Cos are expected to fare better in new era of Nigerian banking

Focus on the issues raised

According to an executive summary of the conference which was made available to Nairametrics, banks’ stakeholders are especially worried about the following:

GTBank 728 x 90
  • The negative impacts of CBN’s constant CRR debits.
  • The issue of naira’s liquidity management.
  • They are also worried about FX liquidity (or the lack thereof), as well as the exchange rate unification at CBN’s different windows. When will the CBN resume dollar sales to foreign portfolio investors in the I&E window?
  • Lastly, banks’ stakeholders are worried about COVID-19 and its impacts on earnings outlook, loan restructuring, and asset quality.

Part of the document containing the executive summary of the conference said:

“Banks are more concerned about the arbitrary nature and lack of understanding of the CRR debits as it makes it difficult for them to plan. Most are increasing steps to reduce balances with the CBN to limit debits.  According to the CBN, CRR balances with the CBN currently stand at N10tn, 22% of sector assets and 50% of sector deposits. This is negative for NIMs, but funding costs have also declined, dampening the impact. Most of the banks have presented loans to the CBN for restructuring but are still engaging with clients. According to the CBN, loans presented by the sector for restructuring account for 32.9% of total loans, implying an overall weakness in sector asset quality, which we will likely not see in asset quality deterioration by FY20e given the regulatory forbearance.

“Sector NPL ratio currently stands at 6.6% vs. 11% in April 2019. Banks continue to maintain their position of following strict credit processes to drive credit growth, and not grow loans aggressively due to pressure from the loan-to-deposit ratio (LDR) minimum lending policy of the regulator.

onebank728 x 90

“The improvement in oil prices has also reduced the concerns of asset quality deterioration in oil and gas exposure. Obligors in the sector have a breakeven cost price at the USD30/bbl level. Some banks expect further devaluation in the currency at the official window, given the depressed FX revenue outlook from
lower oil prices, but acknowledge the backward integration drive of government to improve corporates’ sourcing of raw materials locally to reduce pressure on FX due to imports.”

Download the Nairametrics News App

Recall that there have been different reports and forecasts about the recent negative pressures on Nigerian banks and how their earnings/profitability might take a hit. And this is probably the first time these banks are acknowledging and speaking up about these changes. It is unclear, at this point, what the CBN might do to remedy some of the concerns raised.

app
GTBank 728 x 90

In the meantime, you may download the full report containing the key takeaways from the conference by clicking here.

Patricia
Continue Reading

Financial Services

Adesina Probe: US Treasury Secretary praises AFDB’s decision on independent review

The AFDB said it supported an internal investigation that cleared Adesina.

Published

on

Adesina Probe: US Treasury Secretary praises AFDB’s decision on independent review, Growth must be seen in citizens' lives, AFDB President to African leaders, AFDB launches $3 billion “Fight COVID-19” social bond, Adesina Probe: US Treasury Secretary praises AFDB’s decision on independent review

The US Treasury Secretary, Steven Mnuchin on Thursday praised the African Development Bank’s decision for an independent probe of the bank’s president, Akinwunmi Adesina.

Mnuchin, while stating that institutions must be held to standards of transparency, commended the AfDB’s decision to pursue an independent review.

UBA ADS

“International intuitions must adhere to the highest standards of governance and transparency, and the decision to pursue an independent review demonstrates the strength of the African Development Bank,”

“Undertaking an independent review is fully consistent with a presumption of innocence,” Mnuchin said.

Mr. Adesina was accused by a whistleblower of abusing his office with allegations of nepotism through handing contracts and appointments, accusations he has denied.

GTBank 728 x 90

The AFDB said it supported an internal investigation that cleared Adesina. However, the US government demanded an independent review.

READ MORE: AfDB bows to pressure from U.S, orders an independent probe of Akinwumi Adesina

The panel will be chaired by former Irish president, Mary Robinson, and includes Gambian Chief Justice, Hassan Jallow, and Leonard McCarthy, former World Bank Vice president for Integrity and also an ex-South African government official.

onebank728 x 90

They will review an ethics committee report that found zero evidence of wrongdoings on Adesina and the review is expected to be completed in 2–4 weeks.

The United State is the bank’s second-largest shareholder and called for an independent probe, rejecting the bank’s internal review.

President Buhari has assured Adesina of Nigeria and Africa’s backing from the American “onslaught”.

app
GTBank 728 x 90

The shareholders of the bank also include all 54 African Nations and 27 others from the rest of the world and also serve as Africa’s largest multilateral bank.

 

Patricia
Continue Reading