GCR Assigns TrustBond Mortgage Bank Plc a National Scale Rating of BB+(NG); Outlook Stable.

20 Sep 2016 In Rating Notifications

GCR Assigns TrustBond Mortgage Bank Plc a National Scale Rating of BB+(NG); Outlook Stable.

Lagos, 20 September 2016—Global Credit Ratings has accorded TrustBond Mortgage Bank Plc (“TrustBond” or “the bank”) first time, public national scale ratings of BB+(NG) and A3(NG), in the long and short term respectively; with the outlook accorded as Stable.  The ratings are valid until July 2017.

RATING RATIONALE

Global Credit Ratings (“GCR”) has accorded the above credit ratings based on the following key criteria:

The ratings reflect TrustBond’s long operational history of over two decades in Nigeria, albeit the brand visibility is still relatively low in the country, having been re-branded three times since its inception as a result of ownership changes.

The capitalisation level has been relatively flat over the five year review period on account of weak internal capital generation. Nevertheless, TrustBond’s total capital (post adjustment for intangible assets) of N5.2bn at FYE15, exceeds the statutory minimum requirement and is thus considered satisfactory. Around 52% of the balance sheet was financed by shareholders’ funds at FYE15.

Asset quality, in terms of the advances portfolio, came under pressure in F15, with the gross non-performing loan ratio escalating to 12.2% (FYE14: 6.0%), albeit slightly below the 15.4% estimated industry average for the year.

Liquidity risk appears to be moderate, considering the strong liquid and trading assets/total short term funding ratio of 54% at FYE15, comparing favourably with peers. The statutory liquidity ratio ranged between 45% and 73% during the year, ending at 68% at FYE15.

TrustBond’s performance has been mixed over the past five years, with losses recorded at the post tax level in the three year period to F14. This trend reversed in F15, as the bank registered a post-tax profit of N41.3m. However, total comprehensive income ended down at N13.9m (F14: N113.9m) due to a loss from discontinued operations and fair value loss on available for sale securities. Overall, the bank achieved ROaE and ROaA of 0.8% and 0.4% in F15 respectively, compared to negative ratios in F14.

Improvement in the bank’s market share, asset quality, as well as establishing and sustaining an acceptable profitability track record. A negative rating action may follow a decline in financial performance, significant decline in market share, as well as deterioration in asset quality.

NATIONAL SCALE RATINGS HISTORY
Initial/last rating (not applicable)
Long term: (first time/new rating)                       
Outlook: (first time/new rating)                           
                                                             
ANALYTICAL CONTACTS
Primary Analyst                                        Committee Chairperson   
Julius Adekeye                                           Dave King
+23 41 462 2545                                         .(JavaScript must be enabled to view this email address)
.(JavaScript must be enabled to view this email address)                     


APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Criteria for Rating Bank and Other Financial Institutions, updated March 2016
Nigerian Banking Sector Bulleting, 2016
Glossary of Terms/ Ratios (February 2016)


RATING LIMITATIONS AND DISCLAIMERS

ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK:  HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.COM.NG.


SALIENT FEATURES OF ACCORDED RATINGS

GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for 12 months, or as indicated by the applicable credit rating document.

The ratings were solicited by, or on behalf of, TrustBond Mortgage Bank Plc, and therefore, GCR has been compensated for the provision of the ratings.

TrustBond Mortgage Bank Plc participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of info received was considered adequate and has been independently verified where possible.

The credit ratings above were disclosed to TrustBond Mortgage Bank Plc with no contestation of/changes to the ratings.

The information received from TrustBond Mortgage Bank Plc and other reliable third parties to accord the rating included the audited annual financial statements of TrustBond Mortgage Bank Plc for five years, up to 31 December 2015, and as well as detailed information related to the bank’s operations.

 

 


 

DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE UNDERSTANDING RATINGS SECTION OF THIS SITE.

 

ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.COM.NG/UNDERSTANDING-RATINGS. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT HTTP://GLOBALRATINGS.COM.NG/RATINGS-INFO/RATING-SCALES-DEFINITIONS. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE UNDERSTANDING RATINGS SECTION OF THIS SITE.

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