GCR Upgrades Rand Merchant Bank Nigeria Rating to AA
GCR Ratings (GCR) has upgraded Rand Merchant Bank Nigeria Limited’s (RMBN) national scale long-term issuer rating to AA(NG) from AA-(NG) and affirmed the short-term issuer rating of A1+(NG), with a stable outlook
According to GCR, the ratings upgrade reflects sustained improvement in RMBN’s credit risk profile, underpinned by strong capitalisation, a good risk position, and an adequate funding and liquidity profile.
The ratings also benefit from the demonstrated support from its parent, FirstRand Group Limited, one of the largest financial services groups in Africa, GCR added.
RMBN’s competitive position is underpinned by its established franchise within Nigeria’s merchant banking sub-segment, strong earnings performance, and access to the expertise and network of FirstRand Group.
As of 31 December 2025, the bank accounted for 30.0%, 35.3%, and 22.3% of the merchant banking sub-sector’s total assets, gross loans, and customer deposits, respectively, positioning it among the leading players in the segment.
The bank’s strategy is focused on serving large, blue-chip corporates, through a suite of solutions spanning trading and risk management, short-term working capital and trade finance, as well as longer-term financing and capital markets advisory.
In addition, RMBN leverages FirstRand Group’s product capabilities and international reach to deliver a broad range of financial solutions to corporate clients in Nigeria. The bank’s niche focus and operational efficiency continue to support profitability metrics that measure well above peers.
However, earnings remain concentrated in relatively volatile, market-sensitive income, which accounted for 45.7% of operating revenues as of 31 December 2025, down from 66.9% in 2024.
In addition, the competitive assessment is also constrained by the bank’s small share of the broader Nigerian banking sector, with total assets accounting for an estimated 0.3% of industry assets as of 31 December 2025 from 0.2% in 2024.
RMBN capitalisation is considered a major ratings strength, with capital adequacy ratio well above the regulatory minimum of 10% for merchant banks.
Similarly, the GCR core capital ratio was strong at 33.6% as of the financial year end 2025, though lower than 35.5% in the preceding year, due to a sizeable growth in risk-weighted assets following a 56.5% increase in the loan book during the year under review. Over the next 12–18 months, GCR expects capitalisation metrics to remain robust, supported by continued earnings retention and internal capital generation.
“While our projections of loan growth could moderate the GCR core capital ratio to between 29% and 30% over the next 12-18 months, the ratio is expected to remain supportive of the bank’s overall credit profile”.
Risk profile remains sound, underpinned by asset quality metrics that compare favourably with industry averages. As of 31 December 2025, non-performing loans (NPLs) and credit loss ratios registered at 0.5% and 0.7%, respectively, from 1.4% and 0.8% in 2024, both well below the banking industry averages of approximately 8.0% and 3.5%.
However, counterparty concentration remains elevated, with the top twenty obligors accounting for 99.5% of gross loans as of December 2025 as against 91.8% in 2024.
GCR said this reflects the bank’s focus on large-ticket transactions and gives rise to significant single-name concentration risk.
Furthermore, 55.7% of the loan portfolio was unsecured as of 31 December 2025, which exposes the bank to elevated credit risk in the event of obligor defaults, particularly in a challenging operating environment.
However, this is partly mitigated by the bank’s focus on high quality obligors. Foreign currency (FCY) loans increased to 28.3% of gross loans in December 2025 (December 2024: 13.7%), reflecting improved foreign exchange liquidity in the Nigerian economy, while remaining within the bank’s internal risk appetite and limits.
“Looking ahead, we expect the asset quality metrics to remain stable, supported by stringent underwriting standards and rigorous credit selection and monitoring processes”, GCR said.
Ratings analysts said RMBN funding and liquidity assessment is a neutral ratings factor. As of 31 December 2025, core customer deposits accounted for the bulk of the funding base, constituting 80.5% versus 80.7% in 2024, and largely comprise wholesale deposits from corporates and financial institutions.
Depositor concentration moderated within the review year but remained relatively high, with the top twenty depositors constituting 74.4% of customer deposits as of financial year end 2025 versus 93.4% in 2024.
“We consider the bank to have strong access to diverse funding sources, especially leveraging on the strong balance sheet of its parent, FirstRand Group. Liquidity is considered robust, with the regulatory liquidity ratio consistently maintained at over 100% compared to the minimum requirement of 20%”.
GCR liquid assets coverage of customer deposits and wholesale funding registered at healthy levels of 121.8% and 12.8x, respectively, as of 31 December 2025, compared with 180.9% and 7.6x in 2024.
Being a wholly owned subsidiary of FirstRand, the bank’s ratings benefit from Group support. Ratings analysts said they have observed a history of strong support and assimilation with the parent, with RMBN playing a key role in FirstRand’s thrust into the Nigerian market.
The stable outlook reflects expectations that RMBN’s financial profile will remain sound, with GCR core capital ratio maintained between 29% and 30% over the next 12-18 months.
“We expect asset quality metrics (NPL and credit losses) to remain well-contained on the back of RMBN’s good risk management framework. Funding and liquidity will also remain adequate”, GCR said in the rating note. GCR Affirms Rand Merchant Bank Nigeria Rating, Upgrades Outlook
