The United Bank for Africa Plc (UBA) was at the weekend assigned ‘B’ long term and ‘B’ short term global scale counterparty credit ratings by international rating agency, Standard and Poor’s (S&P).
These ratings on the pan African financial institution are at par with S&P ratings on the Nigerian Sovereign. More so, S&P’s ‘B’ rating is the highest rating currently assigned to any Nigerian-based financial institution, thus reinforcing the respectable quality and strength of UBA, the third largest Nigerian-based bank by total assets, deposits and profits.
The rating agency noted that UBA’s market position is supported by its good franchise in the corporate and retail segments in Nigeria as well as geographic diversification, with operations in nineteen African countries (Nigeria inclusive).
A statement by UBA said it is the only West-African bank with operations in the United States, in addition to its presence in the United Kingdom and France.
Recognizing the strong profitability and capitalization of UBA, S&P noted: “We expect that UBA’s earnings will be resilient despite the economic slowdown in Nigeria. We believe the bank’s capital and earnings under our risk adjusted capital and earnings framework will remain moderate over the next 12-18 months, with its capital adequacy ratio remaining well above minimum regulatory requirements.”
UBA’s capital adequacy ratio was 19.7 percent at year-end 2016, which is well above the regulatory minimum of 15 percent, and we believe it will remain stable over the next 12-18 months. Notably, the well capitalized position of UBA reflects its strong profitability as well as the bank’s sound and prudent risk management practice.
S&P assesses UBA’s risk position as adequate and posits that the ratings of ‘B’ reflects its expectation that the group will exhibit broadly stable asset quality in the next 12 months. The global rating agency anticipates that UBA’s credit losses will decline to about 1 percent in 2017-2018.