Agusto & Co. hereby downgrades the long-term rating assigned to Baobab Microfinance Bank Nigeria Limited to a “Bbb”

Rating Release

Agusto & Co. hereby downgrades the long-term rating assigned to Baobab Microfinance Bank Nigeria Limited to a “Bbb”. 

The rating expires on 30 June 2026. 

Agusto & Co. hereby downgrades the long-term rating assigned to Baobab Microfinance Bank Nigeria Limited (“Baobab MFB” or “the MFB”) to a “Bbb” primarily on account of higher leverage and lower equity cushion. The downgrade also reflects the MFB’s reliance on expensive time deposits and an aggressive loan growth that has strained capital and leverage ratios. Nonetheless, Baobab MFB’s low ratio of nonperforming loans (NPLs) though upheld by write offs, improving profitability ratios and experienced management team are rating positives. We have also factored in the elevated interest rate environment and intense competition in Nigeria’s microfinance banking industry.