FSDH Merchant Bank Limited has been assigned a long-term rating of “A” with a Stable Outlook for 2023/2024 by the technology-driven credit rating agency, DataPro.
In a statement by its Client Services Manager, Mr. Kehinde Rasheed, the rating agency explained that considerations for the rating assigned to the bank include its financial performance, capital adequacy, asset quality, liquidity, profitability, corporate governance, and risk management.
The statement pointed out that FSDH MB leveraged funding obtained from commercial institutions, debt issuances, and depositors during 2022.
“The Commercial Paper issued during the year amounted to a face value of N20.47bn. This is complemented by borrowings from various financial institutions to the tune of N50.8bn. The bank was also able to grow customer deposit liabilities by 37% in 2022.
“The bank channelled the funds into its operation, increasing net loans and advances by 53%. This supported gross earnings and pre-tax profit growth by 77% and 302%, respectively, during the year under review,” the statement added.
It further explained that in 2023, the bank derived gross earnings of N24.4bn for its operations, a significant increase from the previous year’s earnings of N13.7bn.
Rasheed said the rating assigned reflects DataPro’s opinion of FSDH Merchant Banks’ good earning profile, experienced management team, good liquidity, and low risk.
According to him, the rating shows very good financial strength, operating performance, and business profile when compared to the standard established by DataPro.
“This bank, in our opinion, has a strong ability to meet its ongoing obligations. Its Short-Term Rating of “A2” indicates fair credit quality and adequate capacity for timely payment of financial commitments.”
Meanwhile, the rating agency noted that the exercise carries a maximum shelf life of 12 calendar months, in line with international best practice, clarifying that the rating is not an offer to trade in securities nor a substitute for the user’s judgement. “It is meant for reference purposes,” the statement said.