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GCR Assigns FCMB Group Plc National Scale Issuer Ratings of BBB+(NG)/A2(NG); Outlook Stable

Jan 24, 2023   •   by   •   Source: GCR Ratings   •   eye-icon 91 views

GCR Ratings (“GCR”) has assigned FCMB Group Plc national scale long and short-term issuer ratings of BBB+(NG) and A2(NG) respectively, with a Stable Outlook.

 

Rating Rationale

The ratings assigned to FCMB Group Plc (“the Company”) is one notch lower than the Anchor Credit Evaluation (“ACE”) of the consolidated FCMB Group (“the Group”), due to structural subordination. This reflects the Non-Operating Holding Company’s (“NOHC”) reliance on cash flows and dividends from First City Monument Bank Limited (the core entity within the Group), which could be diverted by regulatory intervention at a time of stress.


Rated Entity

Rating class

Rating scale

Rating

Outlook/Watch

FCMB Group Plc

Long Term Issuer

National

BBB+(NG)

Stable Outlook

Short Term Issuer

A2(NG)


FCMB Group Plc is a financial service holding company in Nigeria with core operations in banking and an increasing presence in non-bank financial services through its other subsidiaries. The Group had seven direct subsidiaries and four indirect subsidiaries as of December 2021, with growing franchise strengths across different financial service areas including microlending, asset and wealth management, and investment banking.

 

For more information on the ratings of the Group read, GCR upgrades First City Monument Bank Limited’s National Scale Long-term Issuer Rating to A-(NG) from BBB+(NG) and affirms the Short-term Issuer Rating of A2(NG); Outlook Stable’

 

Outlook Statement

The Stable Outlook reflects GCR’s expectations that the Group’s growth and diversification strategy would continue to enhance the contribution of the non-bank subsidiaries to the Group’s earnings profile; albeit the bank is expected to remain the core operating entity over the rating horizon.

Rating Triggers

The ratings of the Company will follow the creditworthiness of the Group.

 

Ratings History

FCMB Group Plc

Rating class

Review

Rating scale

Rating

Outlook/Watch

Date

Long Term issuer

Initial/Last

National

BBB+(NG)

Stable Outlook

January 2023

Short Term issuer

Initial/Last

A2(NG)

 

Risk Score Summary

Rating Components & Factors

Score



Operating environment

7.50

Country risk score

4.00

Sector risk score

3.50



Business profile

1.00

Competitive position

1.00

Management and governance

0.00



Financial profile

(0.75)

Capital and leverage

(1.50)

Risk

0.25

Funding and liquidity

0.50



Comparative profile

(1.00)

Group support

(1.00)

Government support

0.00

Peer analysis

0.00

Total Risk Score

6.75

 

Salient Points of Accorded Rating

GCR affirms that a.) no part of the rating process was influenced by any other business activities of the credit rating agency; b.) the ratings were based solely on the merits of the rated entity, security or financial instrument being rated; and c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument.

 

The credit ratings have been disclosed to the rated entities. The ratings above were solicited by, or on behalf of, the rated entities, and therefore, GCR has been compensated for the provision of the ratings.

 

The rated entities participated in the rating process via face-to-face management meetings, as well as other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible. The information received from the rated entity and other reliable third parties to accord the credit ratings included:

  • The audited financial results as at 31 December 2021
  • Unaudited interim account for 1Q FY22
  • Four years of comparative audited numbers
  • Other related documents

 

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