Fitch lowering the Afreximbank rank to ‘BBB -‘

Global Ratings Agency Fitch Ratings has reduced the ranking of African export-imports (Afreximbank) Long-term Publisher Long-Term Publisher (IDR) to ‘BBB-‘ from ‘BBB’, signifies “negative prospects”.

The Global Ranking Agency also reduced the short-term IDR to the bank to ‘F3’ from ‘F2’, and the long-term ranking in the global medium-term note program and the issuance of debt into ‘BBB-‘ from ‘BBB’.

In the ranking action comments released on Wednesday, June 4, 2025, Fitch said that downgrade reflects the revision of the lower revision of his solvency assessment from ‘A-‘ to ‘BBB+’, which reflects ‘high’ (previous ‘moderate’ credit risks and ‘weak risk management policies’ (previously ‘moderate’).

“Increased credit risk comes from an increase in the ratio of non-labor work loans (NPLS) as calculated by Fitch, which exceeds the 6% ‘high risk’ threshold described in the Fitch’s criteria at the end-2024,” the commented noted.

“Revision of risk management to be ‘weak’ reflects a low transparency in reporting new loan performance -this is relative to fellow multilateral development banks, and that the definition of Fitch NPL is different from the bank approach, which utilizes the flexibility offered by IFRS 9.

“Negative prospects reflect the risk that the debt owed to Afreximbank by some sovereign borrowers may be included in the perimeter of this sovereign debt restructuring.

“This will put pressure on our assessment of the interests of bank policies and increase risks associated with their strategies.

Also read: Afreximbank Projects 4% GDP Growth for Africa in 2025

“The ranking is driven by the Mandiri Bank Credit Profile (SCP) from ‘BBB-‘, which reflects a lower assessment of the solvency assessment (‘BBB+’) and liquidity (‘A’), and the ‘High Risk’ business environment (-2 notching).

“Solvency assessment of ‘BBB+’, which has been revised from ‘A-‘ in the previous review, balances the capitalization of ‘strong’ banks and ‘moderate’ risk profiles.

Fitch also reduced its evaluation of bank risk management from ‘being’ to ‘weak’, referring to a weak transparency in reporting loan performance compared to colleagues and increased risk related to exposure to bank sovereignty loans.

“We note that the bank operates with high credit risk and risk mitigan and has taken relatively large provisions on several sovereign exposure, which will reduce the potential for further negative financial impacts for banks,” the agent added.

Fitch said that the high-risk business environment assessment partially reflects the exposure of banks to the ‘high-risk’ operating environment, with weak credit quality, low capita, and high political risk in operating countries.

The rating agency said the risk assessment of the Afreximbank business profile remains ‘moderate’ but is negatively influenced by low transparency in reporting loan performance, which has led to the revision of the quality of governance assessment to ‘high risk’ of ‘moderate risk’.

Fitch highlighted the capitalization of Afreximbank, with a capital asset ratio of moderate risk of 21 percent and the ratio of equity to strong assets and 19 percent guarantee at the end of 2024.

This, said the organization, was supported by the generation of internal capital and an increase in capital approved in 2021.

By: Babajide Okeowo