GCR Affirms Development Bank of Nigeria AAA/A1+ Ratings
GCR Ratings has affirmed Development Bank of Nigeria Plc’s (DBN) national scale long and short-term issuer ratings of AAA(NG) and A1+(NG) , respectively.
The ratings agency also affirmed the bank’s Series 1 NGN23 billion Senior Unsecured Bonds national scale issue rating of AAA(NG). The Outlook on the ratings remains Stable.
According to GCR, DBN’s ratings are supported by its strong capitalisation, stable funding base and good risk profile. The Bank operates as the dominant entity within DBN Group, which includes its wholly owned subsidiary: Impact Credit Guarantee Limited (ICGL).
As DBN is the parent entity, accounting for over 90% of the Group’s total assets and operating revenue, the Bank’s ratings effectively reflect the Group’s overall credit profile.
DBN’s mandate is to bridge the funding gap created by the inability of existing lending institutions to meet the funding needs of micro, small, and medium enterprises (MSMEs) in Nigeria by providing access to long-term financing through participating financial institutions (PFIs) as conduits.
Additionally, DBN, through its subsidiary, ICGL, issues partial credit guarantees (up to 60%) to PFIs for loans granted to eligible MSME businesses.
In 2025, the Group’s cumulative guarantees increased by 107.7% to NGN77.7 billion, while the loan book grew by 20.6% to NGN529.7 billion, underpinned by its partnerships with PFIs that have extensive distribution networks.
Going forward, mandate delivery would be further supported by the upward revision of the single obligor limit for wholesale DFIs to 35.0% from 20.0%, which is expected to drive loan book growth.
GCR said the group is well capitalised, with the GCR core capital ratio registering at 46.7% as of December 2025, down from 52.0% as of December 2024.
The leverage ratio also confirms the strength of capitalisation as it remained strong at 35.7% from 32.8% in 2024. Over the next 12 to 18 months, GCR analysts expect these metrics to remain stable, even with the projected 20.0% growth in the loan book and planned dividend payment, which is limited to 25.0% of distributable profit.
The ratings note stated that DBN manages credit risks through stringent underwriting standards, proactive monitoring of exposures, and adequate collateralisation using treasury bills, bonds, and movable assets.
The Bank also has direct debit mandates on PFIs’ accounts with the Central Bank of Nigeria. Consequently, the Group has maintained strong asset quality metrics over time, with the non-performing loan (NPL) ratio registering at 0.2% as of 31 December 2025, while the ratio of called to cumulative guarantees registered at 3.0%.
Ratings analysts noted that the bank’s concentration risk remains high, with the top 20 obligors accounting for 98.3% of gross loans in 2025.
However, this reflects the Group’s primary model of channelling finance through PFIs and is partly mitigated by their good credit profile. Overall, the risk profile is expected to remain sound over the outlook horizon, GCR stated.
Ratings analysts said DBN’s operations are largely funded by long-term wholesale funds obtained from international development financial institutions at concessionary terms.
As such, the stable funding ratio has remained high, averaging 94.6% over the past five years. DBN also maintains a good liquidity profile with 31.7% of total assets in liquid Federal Government of Nigeria (FGN) bonds and interbank deposits as of 31 December 2025.
“We expect the funding and liquidity assessment to remain stable going forward”.
The Series 1 NGN23 billion Senior Unsecured Bonds (the Series 1 Bonds) was issued in June 2023 under DBN’s (the Issuer) NGN100 billion Bond Issuance Programme registered with the Securities and Exchange Commission (SEC) in April 2022.
The Issuer’s payment obligations under the Series 1 Bonds and in respect of principal and any coupon on the Series 1 Bonds rank at least equally with all unsecured and unsubordinated obligations of the Issuer, both present and future, except for obligations mandatorily preferred by law applying to companies generally.
Given that the Issuer offers timely and full coverage of all payments due to the bondholders under the Series 1 Bonds, the Series 1 Bonds bear the same default risk as its Issuer and would reflect similar recovery prospects to the senior unsecured creditors in the event of a default.
Per the performance report provided by the joint trustees (to the bondholders) dated 17 March 2026, five timely coupon payments totalling NGN8.3 billion have been made to date, and no breaches have been noted.
The stable outlook reflects ratings analysts’ expectation that key metrics such as the GCR core capital ratio will remain above 35.0%, supported by earnings retention and conservative lending, while the business profile will not change materially.
Ratings analysts said the bank’s funding is expected to remain stable and diversified, supported by good access to international development finance institutions. Naira Falls to N1,358 as FX Demand Eclipses Supply
