DBN Basks In GCR’s Triple “AAA” Long Term Rating

BY COBHAM NSA – For its unparalleled position in meeting short and long-term obligations, the Development Bank of Nigeria (DBN) is currently basking in the “AAA” Long Term National Scale rating accorded it by Global Credit Ratings (GCR)

Announcing the cheering news on its official website, GCR said the conferment, the highest rating for financial institutions in the continent, is in line with the “risk-free” rating of the Nigerian Sovereign and attests to DBN’s strong fundamentals and credibility in the industry.

As one of the leading rating agencies in Africa, GCR said the valuation recognises DBN’s strategic importance and developmental role in providing wholesale financing to eligible Participating Financial Institutions (PFIs).

Expressing satisfaction with the development, Managing Director and Chief Executive Officer of DBN, Mr Tony Okpanachi said; “We are pleased with this debut rating of “AAA”, with a stable outlook, from GCR, one of the foremost rating agencies in Africa.

“We appreciate the rigorous and diligent assessment of GCR as it provides an additional layer of independent review of our governance and risk management practice, ESG principles, and broader management of the institution.

“More importantly, the outcome of the rating exercise, as expressed in our “AAA” national scale rating, is a testament to our balance sheet capacity, quality of the risk asset portfolio, and sound risk management practice.”

According to him; ‘‘We would continue to adhere to global best practice in market interventions, as we remain committed to alleviating financing constraints faced by MSMEs and Small Corporates in Nigeria, through the provision of financing and partial credit guarantees to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.”

Also reacting to the development, DBN’s Executive Director, Finance and Corporate Services, Mrs Ijeoma Ozulumba said; “This credit rating reflects the strong credibility of the Bank, as we continue to preserve our strong fundamentals.

Ozulumba said the Bank will consolidate its lending activities while maintaining strong capitalization, stable funding, and robust liquidity going forward.

‘‘We look forward to deepening our penetration and broader impact, especially as the success of our market-development initiatives reinforces our optimism on unlocking credit to the MSMEs in a sustainable way that aligns with our ultimate objective of catalyzing inclusive growth and development of the Nigerian economy”, she assured.

Meanwhile, in its explanatory notes on the “AAA” credit rating conferred on DBN, GCR said the development reinforces “unparalleled position of the Bank in meeting short and long-term obligations whilst also reflecting the unrivaled strength of the guarantee of its wholly-owned subsidiary – Impact Credit Guarantee Limited, which provides credit enhancements to MSMEs.’’

It noted that DBN’s emergence as a leading financial institution reflects the Bank’s “strong capitalization, minimal risk exposure and stable funding structure, complemented by sound liquidity profile”.

GCR also said this new status underscores DBN’s capacity to deliver on its mandate of alleviating financing constraints faced by Micro, Small, and Medium Scale Enterprises (MSMEs) in Nigeria.

Furthermore, it said; “The Bank’s competitive position is supported by its clearly defined mandate, focused operation, and an ongoing performance monitoring and evaluation system.’’

The rating body acknowledged that with a capital adequacy ratio above 100 per cent, DBN’s strong capitalization and low leverage reinforce the rating strength and provides adequate headroom for scaling operations and growing the risk assets portfolio.

Similarly, it considered DBN’s risk position as “neutral“, with no credit losses from inception to date, moderate intermediate operational risk exposure, absence of foreign exchange risk, and the Bank’s sound underwriting process which provides for adequate loan collateral coverage, with good recovery prospect.

“The stable outlook reflects our expectation that DBN will maintain strong capitalization and liquidity metrics over the next 12-18 months. Earnings are projected to be more reflective of core operations as the bank increases risk assets, with GCR’s core capital ratio expected to remain above the 30-35% band to sustain the risk score”, the rating agency said

Again, praising DBN for sustaining its strong risk metrics during the COVID-19 pandemic, GCR noted that significantly, “DBN maintained an enviable track record of zero Non-Performing Loans (NPLs) since inception in 2017, an outstanding record which highlights the efficacy of its on-lending model and broader risk management practice.’’