Sterling Asset Management and Trustees Limited (Aug 2022)

Capital and leverage is favourably considered and a ratings positive, with GCR’s calculated leverage ratio at a stable and strong 20% at 1QFY22. We expect this metric to remain within a similar range going forward based on historical trends, and as management continues its conservative approach to capital and FUM growth. Funding and liquidity position is assessed at an intermediate level. SAMTL’s funding base comprises largely investment products targeted at high net-worth individuals, with maturities ranging between 30days – over 365 days, and can be rolled over at maturity.

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CapitalSage Limited (Aug 2022)

Cash flow and leverage is positively viewed given the low gearing level. While the Company issued about N3.5bn short term private notes in two tranches during FY21, under its N10bn debt issuance programme, to support business expansion, it demonstrated sound ability to repay its debt with net debt to EBITDA margin closing FY21 at 0.12x. As at end-May 2022, one of the series have been fully repaid, with more private notes (about N2.2bn) issued during the current year.

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Dangote Industries Limited (Jun 2022)

Dangote Industries Limited was incorporated in Nigeria in April 1985 as a private limited liability company and commenced operations in July 1999. The shares are held by Greenview International Corporation (Cayman Islands) and Dangote Nigeria Limited (0.01%), but Mr. Aliko Dangote is the ultimate controlling party. DIL has 85.80% shareholding in Dangote Cement Plc (“DCP”), 68% in Dangote Sugar Refinery Plc (“DSR”) and 62.19% in NASCON Allied Industries Plc (“NASCON”), with significant shareholding in 16 other entities2, and non-controlling interests in two entities3. During FY20, DIL consolidated the two project companies, namely, Dangote Oil Refining Company Limited (“DORC”) and Dangote Fertiliser Limited (“DFL”), in which it has 9.5% and 9.8% shareholding respectively. 

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ENL Consortium Limited (Jun 2022)

Incorporated in 2002, ENL commenced operation as utility management services provider within the Nigerian downstream power sector. Having operated for four years, the Company shifted focus to port and terminal operations in 2006, after being granted a concession by the Nigeria Port Authority (“NPA”) to operate the Terminal C and D of the Lagos Apapa Port Complex, handling all types of cargo, namely: bulk, break-bulk, and containerised products. The concession agreement has an initial term of 15 years, which expired in April 2021.

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Staco Insurance Company SL Limited (Jun 2022)

Staco was incorporated on 27 February 2008 and commenced operations same year as a subsidiary of Staco
Insurance Plc (“Staco Nigeria”). In 2020, Staco Nigeria sold its 60% ownership stake in the insurer to Righini Capital
Limited (an advisory and investment firm). Following this change, the insurer is currently in the process of rebranding.
The insurer is predominantly domiciled in Sierra Leone, operating as a composite insurer, with insurance coverage of
both life and non-life in the primary market.

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FCMB Asset Management Limited (Jun 2022)

FCMB AM, formerly First City Asset Management Limited, was incorporated on 25 July 1997 and commenced operations in January 2020, with principal business activities of providing fund management, administration, and investment advisory services. The name change on 4 October 2019, was largely attributed to management’s strategic drive to align with the Group’s strong brand franchise. FCMB AM is a sub subsidiary of the Group, through CSL stockbrokers Limited, which owned 100% stake in the asset manager. However, the asset manager remains a non-core entity within the Group, contributing a modest 0.1% and 0.7% to total assets and gross earnings respectively at FY21.

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LAPO Microfinance Bank Limited (Jun 2022)

LAPO Microfinance Bank Limited traces its roots to the 1980s when it was established as a pro-poor non-governmental organisation. The entity transitioned to a microfinance bank in 2010 operating a state microfinance banking license, and subsequently upgraded to a national microfinance banking license in 2012, enabling its expansion across the different sub-regions of the Nigerian market. The bank is privately owned, with two majority shareholders – Godwin Ehigiamusoe (founder and previous chief executive officer) and Lift Above Poverty Organisation, with 40% and 56.9% ownership stakes respectively at FY21. Our assessment of the bank is on a stand-alone basis, as LAPO Mfb has no operating subsidiaries and is not part of a group.

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Regulatory Update: Nigerian Banks are set to transition to Basel III Standards (Jun 2022)

Most Nigerian banks meet the expected capital and leverage requirements. However, Basel III would compel banks to prioritise earnings retention over discretionary capital distributions in the near term.

  • We expect increased issuances of additional tier 1 and tier 2 capital instruments as well as greater demand for investment grade corporate debt securities by banks over the medium term. These developments will likely deepen the domestic bond market.
  • Full implementation of Basel III is anticipated to improve the banking sector’s overall resilience. The new regulation would curtail excess growth, foster more prudent capital management and enhance banks’ liquidity position.
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Nigerian Financial Institutions Comparison (May 2022)

There are various financial institutions under the supervisory purview of the Central Bank of Nigeria, namely: the deposit money banks, finance companies, primary mortgage banks, development finance institutions and microfinance banks. This research piece predominantly outlines the major difference between the deposit money banks (mainly commercial and merchant banks) and the microfinance banks.

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Nigerian Country & Sector Risk Scores

GCR’s Rating Framework is anchored on the GCR Risk Score. This numerical scoring system, which forms a single analytical approach across multiple sectors, is designed to improve the transparency of GCR’s ratings. It also allows comparability between different countries, regions and sectors.

Nigeria Country Risk Score: Nigeria’s Country Risk Score of 3.75 balances its strong economic base, supported by significant natural resources and large population, against low wealth levels, moderately weak institutional scores and currently restrained economic growth.

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