Abbey Bank Retains A3 Short-Term Credit Rating as Liquidity, Capital Strengthen

Abbey Bank Plc has retained its A3 short-term credit rating from Agusto & Co., following improvements in its capitalisation, liquidity position, asset quality and profitability, as the lender prepares to commence commercial banking operations in November 2026.

The credit rating agency also affirmed the bank’s “Bbb-” rating and assigned it a Stable Outlook, indicating expectations that the lender’s strengthened financial position, expanding market presence and increasingly diversified earnings will support its credit profile.

The affirmation comes as Abbey Bank advances its transition from a national mortgage bank to a regional commercial bank, following approval by the Central Bank of Nigeria (CBN) in June 2026.

The transition is expected to broaden the bank’s financial services offerings, expand its customer base and strengthen its revenue-generating capacity as it seeks to establish a stronger presence across the South-West, South-South and North-West regions, as well as the Federal Capital Territory, Abuja.

A key factor underpinning the rating affirmation is the bank’s strong liquidity position, which provides it with significant capacity to meet its short-term financial obligations.

As of December 31, 2025, Abbey Bank’s total assets stood at N166 billion, while its liquid assets amounted to N148 billion, representing approximately 89 per cent of its total assets.

The bank’s liquid assets-to-deposits ratio stood at 185.3 per cent, substantially above the regulatory minimum of 20 per cent and the levels recorded by industry peers, according to the rating assessment.

In addition, the lender maintained an undrawn $20 million reverse repurchase agreement (repo) line as of June 30, 2026, providing an additional source of liquidity to support its financial obligations and operations.

The bank’s asset quality also improved during the period under review, with its non-performing loan (NPL) ratio declining from 7.7 per cent in 2024 to 7.2 per cent at the end of 2025, before falling further to 4.1 per cent as of June 30, 2026.

The improvement was attributed to continued loan recoveries and prudent loan origination practices, which have helped reduce the proportion of non-performing loans in its portfolio.

The stronger asset quality position is expected to support the bank’s risk management efforts as it expands its operations and enters additional areas of commercial banking.

Abbey Bank’s capital position has also received a boost following its successful N64.5 billion equity raise, for which regulatory approval was obtained in August 2026.

The capital injection is expected to significantly strengthen the bank’s capital base and provide financial support for its transition into commercial banking.

The additional capital will also be important as the lender seeks to expand its operations, increase its capacity to provide credit and develop new financial products to serve customers across its proposed regional markets.

The rating affirmation further reflects an improvement in the bank’s profitability, with profit before tax increasing to N3.1 billion in 2025 from N2.1 billion in 2024.

The increase represents a growth of approximately 47.6 per cent, indicating improved earnings performance during the period.

As part of its commercial banking expansion, Abbey Bank plans to broaden its activities beyond its traditional mortgage banking business to include construction lending, fixed-income trading, foreign currency transactions and trade finance.

These business lines are expected to diversify its income sources, reduce reliance on a narrower range of banking activities and create additional opportunities for growth.

The expansion, however, will require the bank to maintain prudent credit standards, adequate capital buffers and sound risk management practices as it takes on a wider range of financial activities.

Commenting on the rating affirmation, the Managing Director and Chief Executive Officer of Abbey Bank Plc, Mr Mobolaji Adewumi, said the decision by Agusto & Co. was an endorsement of the lender’s financial resilience, liquidity strength and strategic direction.

“The affirmation of our ratings by Agusto & Co., particularly our A3 short-term rating, is a strong endorsement of Abbey Bank’s financial resilience, liquidity strength and strategic direction,” he said.

Adewumi said the ratings reflected the progress made by the bank in strengthening its balance sheet and preparing for its transition to commercial banking.

He added that the bank would focus on building a stronger, more diversified and customer-centric institution while maintaining prudent risk management and financial discipline.

“As we embark on this new phase, our focus remains on building a stronger, more diversified and customer-centric bank, while maintaining prudent risk management and sound financial discipline,” he said.

The chief executive expressed confidence that the transformation would create greater value for customers, shareholders and other stakeholders.

With the planned commencement of commercial banking operations in November, Abbey Bank is positioning itself to compete across a broader segment of Nigeria’s financial services market.

The combination of stronger capitalisation, high liquidity levels, improving asset quality and rising profitability provides a foundation for the transition, while the bank’s ability to sustain these improvements and manage risks associated with its expansion will remain important to its long-term credit standing.

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