GCR Places FCMB’s Long, Short-Term Ratings on Review Extension

The rating firm confirmed this development in a notice on Monday, explaining this was due to an ongoing rating process of the financial services provider.

In the statement obtained by Business Post, GCR disclosed that it intends to inform the investing community of “the updated rating results before May 31, 2025.”

As a result, all the ratings of the organisation, including the national scale issue rating of BBB-(NG) on Series 1 N20.7 billion Additional Tier 1 Subordinated Bonds and Series 2 N26.0 billion Additional Tier 1 Subordinated Bonds have been extended.

At the last rating exercise for FCMB in April 2024, GRC affirmed the company’s national scale long and short-term issuer ratings of BBB+(NG) and A2(NG), respectively, with the Rating Watch Negative outlook extended due to the planned recapitalisation of the consolidated FCMB Group Plc.

It was explained that the rating watch negative was assigned the group’s core operating entity, FCMB Limited, which is the bank arm, due to “pressure on the capitalisation from the adverse impact of macroeconomic environment on the loan book.”

“This is balanced against a sound funding structure, good liquidity and competitive position and the planned capital raise of N150 billion in 2024,” it added.

GCR had said if the planned capital raise in the short term materialises, it would support its core capital ratio at 18 per cent over the next 12 months (all else being equal), otherwise, “we would lower the ratings in the near term.”

“Credit migrations to IFRS 9 stage 3 classification are likely because of the weak macroeconomic climate, with the credit loss ratio registering between 3 per cent and 4 per cent and a gradual resolution of the single obligor limit breaches over the next 12-18 months. “While the funding structure remains sound, CBN’s contractionary monetary policy stance could moderate the liquidity position over the outlook horizon,” a statement said.

FCMB Group has its core operations in banking and an increasing presence in non-bank financial services through other subsidiaries.

It had seven direct subsidiaries and four indirect subsidiaries as of December 31, 2023, with a growing franchise across different financial services areas, including banking, consumer finance, investment management and investment banking.