International Rating Agency, Standard and Poor’s (S&P) assigned its ‘B’
long term and ‘B’ short term global scale counterparty credit ratings to
the United Bank for Africa Plc (UBA). These ratings on the pan African
financial institution, United Bank for Africa (UBA) Plc, 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). More so, UBA 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% at year-end 2016, which is well
above the regulatory minimum of 15%, 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 1.0% in 2017-2018.
Reflecting UBA’s continued market share gain in low cost, stable deposits,
which account for 79% of total customer deposits as at 31 December, 2016,
UBA’s funding and liquidity continue to wax stronger, as reflected in the
average liquidity ratio of 42% in 2016, amidst the tight market conditions
in Nigeria. S&P considers the bank’s funding to be above average and its
liquidity as adequate, owing to its stable and relatively low-cost,
retail-deposit-based funding profile. Despite tightening monetary policy
in Nigeria in 2015-2016, the bank has been able to maintain a stable cost
of funding at about 3.7% as of December 31, 2016”. The Group reported a
net stable funding ratio of 143% as of the same date and exhibits one of
the lowest levels of loan leverage among Nigerian peers. Broad liquid
assets covered short term wholesale funding about 4x as of the same date.
United Bank for Africa Plc is a leading Pan-African financial institution,
offering banking services to more than fourteen million customers across
over 1,000 business offices and customer touch points in 19 African
countries. With presence in New York, London and Paris, UBA is connecting
people and businesses across Africa through retail, commercial and
corporate banking, innovative cross border payments and remittances, trade
finance and ancillary banking services