AGUSTO & Co., a Pan-African credit rating and research agency has upgraded the rating assigned to Development Bank of Nigeria Plc (DBN) to ‘AAA’.
This was contained in the 2021 Final Rating Report recently released by the rating company. The new rating tagged DBN as “A development finance institution of impeccable financial condition and overwhelming capacity to meet obligations as and when they fall due.”
The rating rationale, according to the report, takes into cognisance the support of the bank’s shareholders – the Ministry of Finance Incorporated, Nigeria Sovereign Investment Authority (NSIA), African Development Bank (AfDB) and the European Investment Bank (EIB). 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 who provide funding and technical support in addition to strengthening governance.
Agusto & Co. report listed DBN’s strength to include “good shareholder support, good asset quality, good corporate governance, good capitalisation, good liquidity profile, and experienced management team,” all of which combined to earn the bank a AAA status.
The report stated that despite the global economic implications of Covid-19, DBN maintained its commitment to nurturing MSMEs in Nigeria, while also holding on to a strong credit position. “DBN is a wholesale financial institution that grants loans to eligible participating financial institutions (PFIs) for on-lending to Micro and Small Scale Enterprises (MSMEs) and small-sized corporations. Despite the COVID-19 pandemic, DBN increased its financial support to Micro and Small-Scale Enterprises (MSMEs) and small-sized corporations through participating financial institutions (PFIs) during the financial year ended 31 December 2020.
“As a result, the bank’s gross loans spiked by 109.6 per cent to N215.1 billion as at FYE 2020. As of the same date, approximately 136,000 MSMEs have directly benefited from the financial support of DBN, higher than circa 101,000 MSMEs in the prior year.
“DBN maintained its nil impaired credit position reflecting the strength of its wholesale lending model and the resilience of the credit risk management. Subsequent to the year-end, the bank disbursed loans to four newly onboarded PFIs, all of which are considered investment grade counterparties. DBN intends to further expand the pool of eligible PFIs to increase financial support to MSMEs. We believe the expansion will further test the resilience of the credit risk management policy of the Bank.”
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