GCR Assigns Parallex Bank BBB- Ratings with Stable Outlook
GCR Ratings has assigned Parallex Bank Limited a national scale long- and short-term issuer rating of BBB-(NG) and A3(NG), respectively; the outlook was accorded as stable.
The ratings balance the bank’s strong capitalisation, good funding structure, and moderate risk profile against its modest competitive position within the Nigerian banking sector.
The African market ratings agency said that since transitioning to a regional commercial bank, Parallex has grown rapidly, supported by its growing brand and distribution channels.
The bank’s total assets grew by 72.0% to NGN511.9 billion. However, its market share is below 1.0%, while its operational efficiency metrics lag behind those of rated peers.
Ratings analysts said though the bank’s cost-to-income ratio declined slightly to 76.4% as of 31 December 2025 from 84.2% in 2024, it remains above the industry average of about 50%.
Looking ahead, the bank plans to expand its distribution network by increasing agent onboarding, improving its agency banking platform, and strengthening its digital capabilities through a merchant payment gateway, GCR said.
Ratings analysts said these initiatives could support operational expansion and efficiencies over the outlook period.
Parallex’s capital adequacy was supported by the injection of NGN36.6 billion in equity required to comply with the new minimum capital requirements for its license category.
The GCR core capital ratio consequently increased to 34.7% as of 30 June 2026 from a much lower 11.5% as of December 2025 and 8.5% as of 31 December 2024.
To further support planned scaling, the bank raised NGN8.9 billion in equity above the minimum required, which is pending regulatory verification and approval.
However, GCR analysts note that current reserving toward the IFRS stage 3 loans is relatively low at 32.5% as of 30 June 2026.
After adjusting for low loan loss reserves and planned growth, analysts said expect the GCR core capital ratio to range between 25.0% and 27.5% over the outlook period (12 to 18 months), barring any surprises in terms of credit expansion.
The bank’s risk profile is neutral to the ratings, GCR said.
Nonetheless, ratings analysts said they have noted some deterioration in asset quality, with the non-performing loans (NPL) ratio increasing to 3.9% as of 31 December 2025 and further to 4.1% as of 30 June 2026, driven by delinquencies among a few top obligors.
Ratings analysts also noted the weak internal ratings of the bank’s top exposures, which increase the sensitivity of its credit portfolio to adverse events.
Positively, the bank’s NPL ratio is below the regulatory threshold of 5.0% and is well below the industry average of about 8%.
The bank’s loan book is well diversified, with the single largest exposure and the top twenty largest exposures accounting for 1.7% and 25.4% of the loan book, respectively, as of 31 December 2025.
GCR said the bank’s loans are well diversified across sectors, with no sector accounting for more than 20.0% of total exposures.
Looking ahead, ratings analysts expect the NPL ratio to be maintained below 5.0%, given the restructuring efforts and planned loan book growth.
Parallex’s funding structure is good, with its funding base mainly comprising deposits and equity. In 2025, the bank’s customer deposits grew by 56.3% to NGN164.7 billion, of which 67.2% were classified as low-cost current and savings deposits.
According to the ratings note, the bank’s funding is further supported by collections and cash collateral on overdraft and trade finance facilities.
Liquidity is also well managed, with liquid asset coverage of wholesale funding registering at 3.4x while the regulatory liquidity ratio was maintained well above 60.0% in 2025.
“We expect the good funding and liquidity metrics to be maintained over the outlook period, underpinned by the digital expansion strategies which should support low-cost deposit mobilisation”.
The stable outlook is premised on an expectation that the bank’s current credit profile will be sustained over the next 12 to 18 months, underpinned by good capitalisation, with the GCR core capital expected to range between 25.0% and 27.5%.
Additionally, the funding structure and liquidity profile are expected to remain good over the outlook period, GCR said. # GCR Assigns Parallex Bank BBB- Rating with Stable Outlook
