Agusto & Co assigns a ‘A’ rating to FSDH Merchant Bank

A rating agency, AGUSTO & Co. Limited, has assigned a ‘A’ rating to FSDH Merchant Bank Limited.

According to the agency statement: “The rating assigned to FSDH Merchant Bank Limited considers its strong capitalisation ratios, good liquidity, acceptable asset quality and strong liquidity profile.

“The rating is however constrained by a concentration in the loan book, inflexible funding and the fragile state of the Nigerian economy.

“During the 2018 financial year, FSDH’s profitability strengthened considerably on account of lower funding costs, improvements in asset quality which led to write backs of loan provisions and moderated operating expenses despite inflationary pressures.

It further stated that, “Profit before taxation increased by 34.4 per cent to N5.2 billion, the highest in the bank’s history. Pre-tax return on average assets (ROA) and pre-tax return on average equity (ROE) also strengthened to 3.5 per cent (2.7%) and 17.8 per cent (FY2017:14.9%) respectively.

“These profitability ratios are also the best the Bank has recorded since its transition to a merchant bank and were at the upper end of its peer group”.

“On account of improvement in asset quality and profitability, while maintaining sufficient levels of capitalisation, we hereby upgrade the rating assigned to FSDH Merchant Bank Limited to ‘A.’ it added.