GCR Assigns Abbey Mortgage Bank BBB, A3 Ratings, Outlook Stable

African-focused ratings agency GCR has assigned Abbey Mortgage Bank Plc national-scale long- and short-term issuer ratings of BBB (NG) and A3 (NG), respectively, with a stable outlook.

GCR said the ratings assigned to Abbey Mortgage Bank Plc balance its strong capitalisation metrics and sound liquidity position against an intermediate risk profile and modest competitive position.

Abbey is a primary mortgage bank (PMB) in Nigeria with an established track record of about three decades, according to GCR.

The rating agency said the bank’s mandate is to provide mortgage finance to individuals, corporates, construction companies, and property developers across the country, given its national mortgage licence.

“As of 31 July 2025, Abbey MB’s total assets and customer deposits registered at NGN117.4 billion and NGN82.6 billion respectively compared with NGN84.2 billion and NGN53.9 billion in 2024.

GCR said Abbey ranking it among the leading players within the mortgage banking sub-sector.  Ratings analysts however noted that the size of its loan book is relatively small compared to peers.

The rating note stated that Abbey loans growth has been muted in the last three years due to a deliberate slowdown in lending as part of a strategic plan to transition into a commercial bank.

The bank’s overall competitive profile is further constrained by its limited share of the broader Nigerian banking sector resources, GCR said.

Ratings analysts revealed that Abbey Merchant Bank intends to scale up its operations and extend lending to broader segments of the Nigerian economy when it secures a commercial banking licence

The lender plans to expand its portfolio into oil and gas, agriculture, and FMCG, while maintaining its core strength in real estate financing.

Abbey also plan to introduce a suite of digital solutions aimed at enhancing customer acquisition and engagement to support this transition. These initiatives could strengthen its competitiveness and bolster performance over the rating horizon.

The bank’s capitalisation assessment is a major rating strength. As of 31 July 2025, the GCR core capital ratio registered at 27.8% versus 31.2% in 2024 and fits within the high band of the ratings agency capital assessment.

GCR said while loan loss coverage on Stage 3 loans remained low at 24.9% as of 31 December 2024, some comfort is derived from the bank’s adequate collateralisation levels and existing sale-and-leaseback arrangements.

Over the next 12–18 months, ratings analysts expect the GCR core capital ratio to be sustained above 25%, supported by modest earnings accretion and conservative loan growth.

 In addition, the planned capital injection to meet the requirement for a regional commercial banking licence is expected to further strengthen capitalisation.

“We have assessed the risk position at an intermediate range. As of 31 July 2025, the non-performing loan (NPL) ratio registered at 8.1%, lower than 13.5% recorded as of 31 December 2023.

“The NPLs are largely legacy loans, mainly on-lending facilities under the National Housing Fund (NHF) scheme of the Federal Mortgage Bank of Nigeria (FMBN), which have now been discontinued.

“Management expects most of the NPLs to be recovered. Credit loss ratio is well contained at 0.6% in FY24 (FY23: -1.1%), reflecting a prudent approach.

“However, counterparty concentration risk is evident, with the top twenty obligors accounting for 74.4% of gross loans as of 31 July 2025 from 74.3% in 2024.

“We expect a gradual diversification of the loan book as the bank expands its lending activities following the transition to a commercial bank,” GCR said.

Abbey MB’s funding structure and liquidity profile are considered sound, largely funded by customer deposits, which have historically accounted for c.70.0% of the funding base.

However, GCR ratings analysts said the deposit mix is skewed towards expensive institutional term deposits, constituting 80.5% of the deposit book as of 31 July 2025 from 78.6% in 2024 and translating to a relatively high cost of funds of 12.8% as of the same date, relative to peers.

Depositor concentration is moderate, with the twenty largest deposits representing 30.1% of total deposit book as of 31 July 2025 from 22.9% in 2024.

Ratings analysts considered the bank’s liquidity to be strong, as reflected in the GCR liquid assets coverage of customer deposits and wholesale funding at 107.1% and 20.8x, respectively, as of 31 July 2025, compared with 127.1% and 12.9x, respectively, in 2024.

GCR expects Abbey Mortgage Bank’s funding and liquidity metrics to remain at similar levels over the next 12-18 months.

“The stable outlook reflects our expectations that the strong capitalisation levels will be maintained over the next 12-18 months, with the GCR core capital registering above 25%, despite anticipated growth in the loan book.

“Asset quality metrics are expected to remain stable, predicated by the bank’s rigorous credit approval process. We also expect the bank to maintain a sound liquidity position,” GCR said in the rating note.

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