DBN Bags Augusto & Co ‘AAA’ Rating For Stable Outlook

• Loan portfolio now N215.1bn, credit penetration covers 136,000 MSMEs 

BY COBHAM NSA –The Development Bank of Nigeria (DBN) Plc is on a dazzling growth path with top credit rating agency, Agusto & Co. (“Agusto”) assigning the institution an “AAA” classification in recognition of its stable outlook.

The rating, the highest possible conferred on any financial institution, is in affirmation of “DBN’s good asset quality, good capitalization, good liquidity, and experienced management team.”

In rehashing the rating, which aligns with the “risk-free” rating of the Nigerian Sovereign, Agusto described DBN as “a development finance institution of impeccable financial condition and overwhelming capacity to meet obligations as and when they fall due”.

The Agency further noted that in pursuing its mandate of enhancing access to credit for micro, small and medium scale enterprises (MSMEs), DBN has been expanding its operational scope; on-boarding more Participating Financial Institutions (PFIs); and deepening credit penetration in the low end of the market, particularly amongst women entrepreneurs, who represent over 50% of the bank’s ultimate credit beneficiaries.

By Agusto’s appraisal; “Despite the COVID-19 pandemic, DBN increased its financial support to Micro, Small and Medium Scale Enterprises (MSMEs) and small-sized corporates through participating financial institutions”.

It also noted that notwithstanding the pandemic, DBN doubled its loan portfolio to N215.1billion, leveraging its robust risk management practice in deepening credit penetration to over 136,000 MSMEs.

Agusto, which further reiterated the impeccable fundamentals of DBN, said; “DBN’s good asset quality, good capitalization, good liquidity, and experienced management team are also positive rating factors”.

In announcing the credit rating, Agusto noted DBN’s evaluation; “Takes into cognizance the support of the Bank’s shareholders – the Ministry of Finance Incorporated, Nigeria Sovereign Investment Authority (NSIA), Africa Development Bank (AfDB) and the European Investment Bank (EIB). AfDB and EIB are both rated ‘Aaa’ by Standard and Poor, Moody’s, and Fitch Ratings.

“Aside from equity contribution, AfDB provides long-term borrowing, technical and business support to DBN. The rating also considers the support of other international development finance institutions such as the French Development Agency (AFD), KfW – the German Development Bank, and the World Bank, which provides funding and technical support, in addition to strengthening governance.”

However, since its inception, DBN has sustained an outstanding asset quality record of nil delinquency, unique fundamentals which attest to the efficacy of its credit creation model and overall risk management culture.

Remarkably, the Bank maintains a BASEL II capital ratio of 75.2 per cent; and several multiples of the minimum 10 per cent regulatory requirement and during the review period, the liquidity ratio hovered around 84 per cent, compared to the 10 per cent regulatory requirement, which by implication is an indication of DBN’s capacity to sustain the pursuit of deepening credit penetration amongst MSMEs.

The strong financial metrics complemented by impeccable governance standards reinforce Agusto’s decision to assign “AAA” on DBN, with a stable outlook.

Reacting to the rating, Managing Director and Chief Executive Officer of DBN, Mr Tony Okpanachi said; “We are excited by this independent assessment of our operations, as it provides an objective opinion on the bank’s credibility and capacity in meeting short and long-term obligations.

“The rigorous and detailed process underlying Agusto’s rating is quite commendable, and I am pleased that the bank was assigned “AAA”, the highest rating possible.”

“Interestingly, this rating action aligns with a recent decision of Global Credit Ratings (GCR), another foremost rating agency that also assigned “AAA” national scale rating on DBN.

“As we continue to uphold gold standards in risk management and governance practices, we would sustain these well-deserved ratings, which are pertinent to our medium to long-term objectives, as we execute our unique strategies for unlocking credit for MSMEs”, he said.

On her part, DBN’s Executive Director, Finance and Corporate Services, Mrs Ijeoma Ozulumba said; “Agusto’s assignment of “AAA” on the Bank is another testament to the strong credibility and capacity of the Bank, as a distinguished development finance institution with an impeccable and overwhelming capacity to meet obligations and deliver on its core mandate.”

According to her; “We would continue to leverage the bank’s balance sheet capacity, global best governance practice, robust risk management framework, and collaborative approach in easing access to credit for growing Nigerian MSMEs, which portend the salient capacity to create jobs, industrialize the economy and drive sustainable growth.”