Togolese Lender Oragroup Rating Downgraded on Financial Challenges
TLDR
- Bloomfield Investment Corporation has downgraded the short-term credit rating of Oragroup (ORTG).
- The rating falls from A1- to A2, while maintaining its long-term rating at A.
- The revised short-term outlook remains stable, but the long-term perspective is negative.
Bloomfield Investment Corporation has downgraded the short-term credit rating of Oragroup (ORTG), a regional banking group operating across 12 African countries, from A1- to A2, while maintaining its long-term rating at A. The revised short-term outlook remains stable, but the long-term perspective is negative, reflecting significant risks tied to ORAGROUP's operational and financial performance in 2023.
The downgrade comes amid a challenging socio-political and economic environment, compounded by a decline in the group’s banking activities and failure to meet regulatory solvency and leverage ratio standards. The holding company’s high debt levels and operational difficulties further contribute to the negative outlook.
Despite setbacks, ORAGROUP has strengthened internal management, implemented regulatory recommendations, and recorded an improvement in some financial indicators. In 2023, the group reported a consolidated net banking income of CFA 215.3 billion, a 3.2% decline from 2022, and a net loss of CFA 18.2 billion.
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Key Takeaways
The downgrade serves as a cautionary tale for financial institutions operating in volatile regions, emphasizing the importance of resilience in navigating economic uncertainties and regulatory challenges. As Oragroup is listed on the BRVM, the downgrade might affect investor sentiment on the regional stock exchange, where the group’s shares are traded. The group's exposure to diverse economies in UEMOA, CEMAC, Mauritania, and Guinea also poses risks and opportunities. Maintaining market confidence while addressing compliance gaps and debt burdens will be critical for long-term recovery and growth.
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