In summarizing 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”.
In pursuit of its mandate of enhancing access to credit for
micro, small and medium scale enterprises (MSMEs), DBN continues to expand the
scope of its operations, onboarding 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.
As observed by Agusto, “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”.
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.
Further reiterating the impeccable fundamentals of DBN,
Agusto highlighted “DBN’s good asset quality, good capitalization, good
liquidity, and experienced management team are also positive rating factors”.
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.
Notably, the Bank maintains a BASEL II capital ratio of 75.2%,
several multiples of the minimum 10% regulatory requirement. During the review
period, the liquidity ratio hovered around 84%, compared to the 10% 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.
In its credit rating announcement, Agusto noted DBN’s rating
“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.”
Commenting on the rating action, the Managing Director/CEO,
Development Bank of Nigeria, 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.”
Speaking on the rating, the Executive Director, Finance
& Corporate Services, Mrs. Ijeoma Ozulumba also, noted that, “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.
“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.”