FSDH Merchant Bank Limited

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FSDH Merchant Bank Limited (2022-04)
  • FSDH Merchant Bank Limited
  • Year : Apr 2022
3 Tokens
USD 300.00

Capitalisation is a significant rating positive, reflecting the bank’s strong capital position, largely comprising of tier 1 capital. Notwithstanding the substantial increase in risk-weighted assets (“RwA”) expected over the next 12-18 months as the bank grows its loan book, GCR computed capital ratio is forecast to remain within the high band, at over 30% during FY21-22 (FY20: 34.0%; FY19: 35.8%). The bank’s capital adequacy ratio (“CAR”) sits well above the 10% regulatory requirement for merchant banks in Nigeria, registering at 31.0% at FY20 (FY19: 31.2%). This strong capital position provides sufficient headroom for the projected high loan book growth and cushion for potential loss absorption.

Additional Information

The bank traces its origin to 1992, when it was incorporated as First Securities Discount House Limited, and subsequently transitioned to FSDH Merchant Bank Ltd in 2012. The bank is 100% owned by FSDH Holdco, while the ownership structure for the Group is concentrated. FSDH Holdco’s majority shareholders as at FY20 include KMC Investments Limited (32.04%), Atlantic Coast Regional Funds LLC (23.25%), United Capital Asset Management Limited (10.8%), FSDH Staff Co-operative Society (10.4%), and International Finance Corporation (6.26%). The Stable Outlook reflects GCR’s opinion that the financial profile of FSDH will remain stable over the next 12-18 months. While RwA is expected to increase significantly due to the high loan book growth, we expect the bank’s capitalisation to remain firm within the high band over the rating horizon.

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