E-Financial
Diamond Bank’s Solvency Crisis Will Further Worsen—Moody’s Warns
The baseline credit assessment (BCA) and adjusted BCA of Diamond Bank Plc have been downgraded from caa3 from caa1 by Moody’s Investors Service.
Moody’s Investors Service, foremost global rating agency explained that the action was as a result the Nigerian lender’s weakened solvency, governance tensions and foreign currency liquidity challenges.
“In Moody’s view, the bank will face a further deterioration of its solvency that will likely undermine investor confidence and make foreign currency funding increasingly costly and difficult to access, or the bank will receive external capital support from either existing or new shareholders, or from the government, boosting its solvency and addressing its foreign currency vulnerability,” the statement said.
On the downgrading of the ratings, the statement noted that, “The primary driver for the two-notch downgrade of Diamond Bank’s BCA to caa3 is Moody’s view that the lack of progress in resolving NPLs adds pressure on its already weak solvency profile,” the statement said.
Also, the rating firm downgraded Diamond Bank’s long-term local currency and foreign currency deposit ratings to Caa1 from B3.
The rating agency placed the deposit and other senior ratings and assessments on review with direction uncertain.
Diamond Bank’s Not Prime (NP) short-term local and foreign currency deposits and counterparty ratings and NP(cr) short-term counterparty risk assessments have been affirmed, Moody’s said.
“Moody’s action follows the departure of Diamond Bank’s chairman of the board and three other non-executive board members, and the subsequent announcement of the bank’s third quarter financial results which showed a lack of progress in reducing problematic exposures, in contrast with the improvements that the rating agency had expected.
“The downgrade reflects Diamond Bank’s (1) weak solvency that is characterised by low provisions set aside for its high level of non-performing loans (NPLs) that outsize its tangible common equity (TCE), (2) corporate governance tensions that will likely divert management’s focus from resolving NPLs and could potentially undermine investor confidence, and (3) vulnerable foreign currency repayment obligations in 2019,” the statement said.
It further said the placement of the ratings on review reflects potential for diverging outcomes for Diamond Bank.
Moody’s said its previous assignment of a positive outlook on Diamond Bank’s deposit ratings in June 2018 had been based on expectations of substantial NPL reduction in the following 12 months; however, Moody’s said it now expects NPLs and provisioning needs to remain high.
Diamond Bank’s NPLs ratio stood at about 40 percent of gross loans as of September 2018 from 42 percent at year-end 2017, and only about 20 percent of the NPL stock is covered by provisions. Moody’s estimates that the provisioning requirements currently outsize the bank’s TCE.
“A second driver for the downgrade is the weakened corporate governance of the bank, following the recent unexpected departure of the bank’s chairman and three members of the board of directors. This development reveals tensions that the rating agency expects will delay the resolution of the bank’s large portfolio of NPLs and could potentially undermine investor confidence in the ability of the bank’s management to turn around Diamond Bank’s financial performance.”
A third related factor for the downgrade is Diamond Bank’s vulnerable foreign currency funding profile. The rating agency views the risk that the weak solvency and corporate governance tension may erode customer and depositor confidence, further impairing the bank’s financial performance and negatively affecting Diamond Bank’s funding profile.
“The bank will face significant refinancing needs in the first half of 2019, including a $200 million Eurobond maturing in May 2019.
“Diamond Bank’s liquid foreign currency assets at year-end 2017 amounts to about 25 percent of the debt and borrowings that are maturing in 2019, and the bank is currently looking at various market options to meet its foreign currency funding needs,” the rating firm said.
Moody’s said counterbalancing the aforementioned negative factors, it believes there is a high probability of government support for Diamond Bank, in case of need, reflecting the bank’s designation as a Domestic Systemically Important Bank in Nigeria and its large retail client base of about 10 million clients.
“Diamond Bank’s Caa1 long term deposit and issuer ratings benefit from a two notch support uplift from the bank’s BCA of caa3,” it said.
It said the review on Diamond Bank’s Caa1 deposit ratings will focus on the lender’s ability to address its solvency and foreign currency challenges.
The rating agency said it will assess the likelihood of some of the lenders converting their convertible debt to equity, or the bank raising new capital externally through other means, including any possible takeover.
In addition, Moody’s said it will assess any financing structures and plans that Diamond Bank will put in place in order to boost its foreign currency liquidity, balanced against any deterioration of its foreign currency resources, including any foreign currency deposit outflows.
“During the review period, Moody’s will also monitor steps taken by the bank’s shareholders to strengthen corporate governance, including the potential for Diamond Bank to appoint non-executive and independent directors that will meet the Central Bank of Nigeria’s (CBN) approval,” it ended.
E-Financial
MoneyMaster PSB Marks 2024 Global Money Week
MoneyMaster Payment Service Bank Limited (MMPSB), Nigeria’s payment service bank, is joining blue chip companies and other corporate entities across the globe to celebrate the 2024 Global Money Week from March 18 to 24, 2024.
In a press statement issued on the celebration, MMPSB emphasized its commitment to the provision of top-notch banking services to its customers at all times, including payment services through wallets, savings, individual and business accounts, as well as provision of a platform for customers to buy airtime/data, pay bills and subscribe to cable television, amongst others.
MMPSB said its plans for the week include a “Catch them Young” experiential campaign to tutor kids on the need to embrace savings and investment culture. An estimated 5,000 students from across major schools in Nigeria have been programmed to participate in the week-long financial literacy training in the bank’s coordinating centres across 10 states.
Besides this, the MoneyMaster team will also engage teachers and enlighten them on basic knowledge of savings and investment for future purposes.
The bank added, “As part of the week-long celebration, MoneyMaster PSB will also be releasing thought leadership videos on safety and security on how banking customers can protect themselves. These videos will be shared to its customers via direct email and also on its social media handles for the benefit of the general public”.
The week, celebrated annually, creates global awareness-raising campaign on the importance of ensuring that young people, from an early age, are financially aware, and are gradually acquiring the knowledge, skills, attitudes and behaviour necessary to make sound financial decisions and ultimately achieve financial well-being.
“Protect your money, secure your future”, the theme for this year’s celebration, is focused on safe money management, underscoring the importance of adopting a responsible and informed approach to personal finance, by being aware of potential risks in the financial sector and protecting one’s hard-earned money.
E-Financial
Moniepoint Emerges Lead Sponsor of Payments Forum Nigeria – PAFON 1.0
Moniepoint Inc. a global digital financial services provider with operations in Nigeria and an ongoing expansion into other emerging markets, has emerged the lead sponsor of the maiden edition of Payments Forum Nigeria (PAFON 1.0).
Payments Forum Nigeria [PAFON] is an event focused on providing inside-look at the payment industry in the country, offering perspectives from key stakeholders, including payment networks, technology innovators, leading merchants, issuers, acquirers and payment processors.
The Forum is scheduled to take place this Thursday, March 21, 2024 at the Oriental Hotel, Lekki Road, Lagos by 9am-12noon, under the theme: “Payments: Trust, Security and Privacy in AI Era”.
Register here: https://bit.ly/4c4N19H
Moniepoint Inc., founded with the vision to create a society where everyone experiences financial happiness, joins other sponsors of the event: Digital Encode Limited (a leading consulting and integration that specializes in the design, management, and security of business-critical architecture); Cybervergent (a company dedicated to helping protect business sensitive data from cyber-attacks, including customer information, financial records and intellectual property); Payble (a fintech startup that modernises local government payments such as creating citizen-centric payment experiences, delivering flexible billing and simplified rate collection, and Inlaks, an IT company that offers core banking, fraud management, cybersecurity, cloud, data center, enterprise risk management, amongst other industry players.
Moniepoint Inc is the parent company of TeamApt Limited, a Central Bank of Nigeria (CBN) licensed Switch and Processor, and Moniepoint Microfinance Bank, a CBN-licensed Microfinance Bank, and operates the largest distribution network for financial services in Nigeria through its subsidiaries, and has been awarded by the CBN in 2022 as the most inclusive payment platform in the country.
Over 70 million people use their cards on Moniepoint’s POS terminals monthly across every local government in Nigeria.
Led by its Group CEO, Tosin Eniolorunda, Moniepoint Inc.’s technology has powered businesses, offering all the payment, banking, credit and business management tools they need to succeed. It aims to power the dreams of businesses, their employees and customers by providing them with the financial technology tools they need to grow, no matter their digital literacy level.
Moniepoint Inc. currently processes the majority of the POS transactions in Nigeria through its subsidiaries, processing over $182 billion in TPV. It is Africa’s largest Fintech by transaction volume. It is profitable and, in 2022, became QED Investors’ first investment into Africa.
Moniepoint Inc was recently named as the Fintech Company of the Year by the Leadership Newspapers Group.
Speakers:
Meanwhile, speakers lined for PAFON 1.0 are: Chibuzo Efobi, Director, Payments System Management, Central Bank of Nigeria (CBN); Festus Amede, Chairman, Committee of Chief Information Security Officers of Nigerian Financial institutions (CCISONFI); Dr. Adewale Peter Obadare, Chief Visionary Officer (CVO), Digital Encode Limited; Adetokunbo Omotosho, Chief Executive Officer, Cybervergent; Roosevelt Elias, Founder, Payble; Ikenna Ndugbu, Chief Compliance Officer, Moniepoint MFB, and others.
Participation:
Participation is FREE, however, pre-registration is required: https://bit.ly/4c4N19H
E-Financial
BVN Registration Hits 61.16m
Nigeria Inter-Bank Settlement System has said the registration for the Bank Verification Number (BVN) has now increased to 61.16 million, according to Vanguard report.
NIBSS disclosed this on its website on Saturday, adding that the BVN is 61,166,384 as of Friday, March 15, 2024.
Earlier in the year, the agency had reported that as of January 26, the BVN count stood at 59.9 million.
This indicates that there have been 674,280 new registrations for BVN between late January and mid-March.
The need for Nigerians to register their BVN arose following the demands by banks and telecommunication companies asking people to link their accounts and phone numbers with SIM.
Majority of Nigerians have let out their frustrations at some point when the linking of BVN with accounts were not successful.
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