A credit rating agency in Nigeria, DataPro, has granted FSDH Merchant Bank Limited a long-term rating of “A” with a stable outlook for 2023/2024.
The PUNCH reported that this was stated in a statement issued by the credit rating firm on Sunday and signed by Client Services Manager, Kehinde Rasheed.
Before the grade was awarded, DataPro assessed the merchant bank’s financial performance, capital sufficiency, asset quality, liquidity, profitability, corporate governance, and risk management.
“The rating assigned reflects DataPro’s judgement of FSDH Merchant Banks’ good profit profile, experienced management team, enough liquidity, and robust risk management framework.
“The provided rating suggests a low level of risk. It demonstrates excellent financial strength, operational performance, and business profile when compared to the standard established by DataPro.
The rating assessment stated, “This bank, we believe, has a good ability to satisfy its ongoing obligations. Its short-term grade of “A2” indicates fair credit quality and the capacity to meet financial obligations on time.
In 2022, FSDH MB leveraged funds from commercial institutions, debt issuances, and depositors.
The face value of commercial paper issued during the year was N20.47 billion, which was supplemented by N50.8 billion in borrowings from various financial institutions. Customer deposit liabilities also increased by 37% in 2022.
It was shown that the bank funneled the funds into its operations, raising net loans and advances by 53%.
Its gross earnings and pre-tax profit also increased by 77 per cent and 302 per cent, respectively, during the year under review.
Last year, the bank’s operations generated N24.4 billion in revenue, up from N13.7 billion the year before.
The African Development Bank and FSDH Merchant Bank inked a $20 million Trade Finance Facility Agreement in December to promote small and medium-sized firms in Nigeria’s industrial and manufacturing sectors.
The facility included a $15 million Trade Finance Line of Credit to help SMEs and indigenous corporations, as well as a $5 million transaction guarantee to help FSDH validate its trade finance operations.
According to AFDB, the facility would facilitate more than $200 million in trade finance transactions across many sectors, including agriculture, industry, and energy, over the next three years.
FSDH Managing Director/CEO Bukola Smith stated, “We have been looking forward to receiving this financing and we promise that this one will be well utilized because it will help us grow our business and meet the needs of our clients, including women-owned enterprises.”
In 2016, the African Development Bank provided a $50 million Trade Finance Line of Credit to FSDH, which helped 60 beneficiaries in over 370 trade transactions worth $375 million in volume transacted in important sectors like energy, agribusiness, and health, while also boosting intra-African trade.
