Abbey Bank’s N64.5bn Capital Raise, Improved Earnings Support Credit Rating

Abbey Bank Plc’s strengthened capital base, robust liquidity and improved asset quality have supported the affirmation of its short-term credit ratings by Agusto & Co., as the financial institution prepares to begin commercial banking operations in November 2026.

The rating agency affirmed the bank’s “Bbb-” and “A3” ratings and assigned a Stable Outlook, reflecting expectations that its improved financial position, expanding business franchise and growing earnings diversification will sustain its creditworthiness.

The rating affirmation comes at a significant point in the lender’s development, following its transition from a national mortgage bank towards becoming a regional commercial bank, with approval from the Central Bank of Nigeria (CBN) secured in June 2026.

The bank’s planned entry into commercial banking is expected to expand its market reach and enable it to offer a wider range of financial services to individuals and businesses across the South-West, South-South and North-West regions, as well as the Federal Capital Territory, Abuja.

A major factor supporting the rating is the bank’s substantial liquidity position, which provides a strong buffer against short-term funding pressures and enhances its capacity to meet financial obligations as they fall due.

As of December 31, 2025, Abbey Bank reported total assets of N166 billion, with liquid assets accounting for N148 billion, equivalent to approximately 89 per cent of its total assets.

Its liquid assets-to-deposits ratio stood at 185.3 per cent, significantly higher than the regulatory minimum of 20 per cent and the levels recorded by industry peers.

The bank also had access to an undrawn $20 million reverse repo facility as of June 30, 2026, providing an additional liquidity buffer to support its financial position.

The strong liquidity profile is particularly relevant as the lender prepares to broaden its operations, potentially increasing the scale and diversity of its funding requirements under the commercial banking model.

Beyond liquidity, improvements in the quality of its loan portfolio have strengthened the bank’s financial outlook.

Abbey Bank’s non-performing loan (NPL) ratio declined from 7.7 per cent in 2024 to 7.2 per cent at the end of 2025, before dropping further to 4.1 per cent as of June 30, 2026.

The decline was attributed to continued recoveries and prudent loan origination, suggesting progress in managing credit risks and improving the performance of its lending portfolio.

Maintaining this improvement will be important as the bank expands into new lending segments, including construction finance, where effective credit assessment and monitoring will be critical to protecting asset quality.

The bank’s capital position has also received a significant boost from a N64.5 billion equity raise, which obtained regulatory approval in August 2026.

The capital injection is expected to strengthen its capacity to meet the requirements of commercial banking, support business expansion and provide a stronger foundation for the development of new products and services.

Capital adequacy is a key consideration for lenders entering new markets and expanding their balance sheets, particularly as they seek to increase lending activities while maintaining sufficient buffers against potential losses.

For Abbey Bank, the additional capital is expected to support its strategic repositioning and provide greater capacity to pursue opportunities beyond its traditional mortgage banking business.

The lender also recorded stronger earnings in 2025, with profit before tax rising to N3.1 billion from N2.1 billion in 2024. This represents an increase of about 47.6 per cent year-on-year.

The improvement in profitability provides another basis for the rating affirmation, as stronger earnings can help support internal capital generation and provide resources for investment in business expansion.

As it moves into commercial banking, Abbey Bank plans to diversify its revenue streams through construction lending, fixed-income trading, foreign currency transactions and trade finance.

These activities are expected to broaden its income base and reduce its dependence on a limited range of financial services.

The proposed expansion also positions the bank to serve a wider range of customers, including businesses requiring financing for construction projects, companies involved in international trade and customers seeking foreign exchange-related services.

However, sustaining its financial performance will depend on the bank’s ability to manage the risks associated with its expanded operations while preserving the liquidity, asset quality and capital strength recognised in the rating assessment.

Commenting on the development, the Managing Director and Chief Executive Officer of Abbey Bank Plc, Mr Mobolaji Adewumi, described the affirmation as recognition of the bank’s financial resilience 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,” Adewumi said.

He said the rating decision reflected the progress made in strengthening the bank’s balance sheet and preparing for its transition to commercial banking.

According to him, the bank is committed to building a more diversified and customer-focused institution while maintaining sound financial discipline and effective risk management.

“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.

Adewumi added that the bank was confident its transformation would deliver greater value to customers, shareholders and other stakeholders.

With commercial banking operations scheduled to commence in November 2026, Abbey Bank’s next phase will test its ability to translate its improved financial position into sustainable growth, wider market penetration and stronger earnings.

The Stable Outlook assigned by Agusto & Co. indicates that the agency expects the bank’s financial improvements, business expansion and diversification strategy to support its credit profile.

The lender’s ability to preserve its strong liquidity, sustain profitability, maintain asset quality and manage the risks associated with its broader operations will therefore remain central to its performance as it enters the commercial banking market.