GCR Upgrades Coronation Merchant Bank Ratings to BBB+/A2
GCR Ratings has upgraded Coronation Merchant Bank Limited’s national scale long and short-term issuer ratings to BBB+(NG) and A2(NG), respectively, from BBB-(NG) and A3(NG) previously, with the outlook maintained as stable.
The ratings upgrade reflects a marked improvement in Coronation MB’s capitalisation following an equity injection, which also balances the bank’s strong risk profile, good funding structure and adequate liquidity against its modest competitive position.
Ratings analysts recalled that the merchant banker’s capital position was strengthened by an NGN32.1 billion equity injection in March 2026 to meet the new minimum capital requirements for merchant banks in Nigeria.
As a result, the GCR core capital ratio improved to 25.6% as of 30 June 2026 from 15.3% in 2025 and 13.0% in the prior year. However, the assessment is constrained by the bank’s volatile operating revenue, which declined by 49.6% in 2025 due to lower net interest income and market-sensitive earnings.
This constrained internal capital generation, with profit after tax registering at a low NGN791.6 million in 2025 from NGN12.2 billion in the equivalent period in 2024.
Looking ahead, ratings analysts said the enhanced capital position is expected to support loan book growth and eventual earnings accretion, with the GCR core capital ratio projected to be strong, ranging between 18.0% and 22.0% over the outlook period.
The bank holds a well-entrenched position within Nigeria’s merchant banking segment, supported by its strong brand franchise, good track record, and strategic collaboration with affiliates in the Coronation ecosystem, which creates opportunities for cross-selling.
The bank’s position within the segment remained strong in 2025, accounting for about 17%, 15%, and 15% of loans, deposits, and total assets, respectively.
However, the business profile assessment remains tempered by the bank’s relatively low share of the broader Nigerian banking sector’s assets, which remains below 1.0%.
Coronation Merchant Bank’s risk profile remains strong due to its stringent underwriting criteria and proactive monitoring of exposures, which have historically supported zero non-performing loans (NPLs).
As of 30 June 2026, the bank’s NPL ratio registered at 0.9% (December 2025: 1.8%, December 2024: nil), which compares well with the banking sector average of about8%.
However, the loan book is significantly concentrated in line with merchant banking trends, with the single largest exposure and top twenty exposures accounting for 14.5% and 96.5% of gross loans as of 31 December 2025.
Similarly, the bank’s exposures are concentrated by sector, as loans to the manufacturing sector accounted for 41.7% of the loan book in 2025. While this level of concentration poses risks to asset quality, the bank’s internal assessment of these obligors is strong.
Additionally, exposures within the manufacturing sector are well diversified by subsector. Overall, we expect the bank’s risk profile to remain sustained over the outlook period, with the NPL ratio remaining below 1.0%.
Coronation Merchant Bank is mainly funded by deposits from customers and financial institutions, which made up 84.6% and 15.4% of its funding base, respectively, as of year-end 2025.
The bank’s depositor concentration compares well with its merchant banking peers, with the top 20 depositors accounting for 22.2% of deposits as of 31 December 2025, down from 22.5% in 2024.
However, its funding costs have typically been elevated, with the cost of funds at 15.1% in 2025, compared with the industry peer average of about 14%.
To address this concern, the bank has taken steps to reduce dependence on expensive institutional funding, which supported efficiency in 2026, with the cost of funds declining to 11.3% as of June 2026.
The bank’s liquidity position is considered sound, with the regulatory liquidity ratio at 57.1% as of 31 December 2025, well above the regulatory minimum of 20%.
Similarly, GCR liquid asset coverage of total wholesale funding registered over 10x as of 31 December 2025, while the ratio of GCR liquid assets to total customer deposits was 70.4%. These metrics are expected to remain strong over the next 12–18 months.
The stable outlook reflects our expectation that the bank’s GCR core capital ratio will range between 18.0% and 22.0% over the next 12-18 months, supported by internal capital generation, given increased headroom for risk-weighted asset growth and cost optimisation strategies.
Additionally, asset quality metrics are likely to remain above the industry average while the stable funding base and adequate liquidity position are expected to be sustained over the outlook period, GCR said. #GCR Upgrades Coronation Merchant Bank Ratings to BBB+/A2# GCR Upgrades Coronation Merchant Bank Ratings Outlook to Stable
