Rating Release
Agusto & Co. upgrades Rand Merchant Bank Nigeria Limited’s credit rating to ‘Aa’, with a stable outlook
The rating expires on 30 June 2023.
Agusto &Co. hereby upgrades the rating of Rand Merchant Bank Nigeria Limited (‘RMBN’ or ‘the Bank’) to ‘Aa’ and assigns a ‘2’ as the Environmental, Social and Governance (ESG) contribution score. The upgraded rating reflects the Bank’s improved performance and resilience in the face of the weak macroeconomic environment. The rating also reflects good capitalisation, good asset quality, and a stable and experienced management team. RMBN’s membership of the FirstRand Group, a Pan-African integrated financial services provider with an asset base of R2 trillion ($125.4 billion) as at 31 December 2021 was also considered. However, constraining the rating is the arbitrary cash reserve requirement policy which continues to adversely impact the profitability of merchant banks given their wholesale funding as well as the lingering sectoral and obligor concentration in the loan book. We have also considered the impact of the fragile macroeconomy on the Bank. Environmental, Social and Governance issues are adjudged to have a minimal contribution to the credit risk of Rand Merchant Bank Nigeria Limited.
