Jaiz, Taj Banks Get Agusto & Co ‘Bbb’ Rating

Agusto & Co has affirmed the ‘Bbb’ rating assigned to Jaiz Bank Plc just as it upgraded the credit rating of TAJBank Limited to “Bbb”.

In a rating statement issued at the weekend, Agusto & Co the ‘Bbb’ rating assigned to Jaiz Bank Plc reflects the bank’s status as the leading non-interest financial institution with a growing footprint across Nigeria.

The rating also considers Jaiz Bank’s good liquidity profile, good profitability and adequate capitalisation. However, offsetting these positives are the Bank’s high impaired financing ratio and high-cost profile. The rating also takes into cognisance the negative impact of the arbitrary cash reserve deductions, Nigeria’s weak macroeconomic fundamentals and the limited availability of Shari’ah-compliant instruments which hinders effective liquidity management. We have also assigned an ESG score of ‘2’ denoting that environmental, social and governance issues have minimal contributions to credit risk.

The rating agency also upgraded the credit rating of TAJBank Limited to “Bbb reflecting the bank’s growing and adequate capitalisation backed by strong shareholders’ support as well as improving profitability metrics. Since operations commenced in December 2019, TAJBank has continued to expand its capital base through private placements.

The rating note stated that Taj Bank “raised N1.3 billion in FY 2020 and followed up with an additional N2 billion in October 2021.

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TAJBank raised a further core capital of N4.2 billion in April 2022 that is undergoing regulatory approvals and schedules a Sukuk issuance for H2 2022 to fortify the capital base.

“Consequently, the Bank’s shareholders’ fund, Basel II capital adequacy ratio and Basel III common equity tier 1 ratio stood comfortably above the regulatory minimum as at 31 December 2021. However, constraining these positive rating factors are the limited operating history of TAJBank and the high operating cost profile amid the prevailing macroeconomic headwind which continues to threaten asset quality.”