Rating Agencies Affirms UBA Industry Status, Ahead of Half Year Result


As existing and prospective investors awaits the second quarter financial statements of United Bank for Africa Plc (UBA) for the period ended June 30, 2016, Fitch International, one of the foremost global rating agencies has affirmed United Bank for Africa (UBA) Plc viability rating at as the pan-African banking group continue to sustain its benchmark asset quality and strong profitability amidst industry and macroeconomic challenges.

UBA is one of the few banks with strong risk management framework, which has helped keep non-performing loans ratio at a moderate level of 1.74 percent as at the end of March 2016, as against industry average of over 6 percent, as reported by Fitch in its recent report on Nigerian banks.

Fitch also upgraded UBA outlook to stable from Negative, thus reinforcing the strong outlook on the Bank, especially as its diversified network across eighteen other African countries make it relatively immune against the potential cyclical volatilities in any of its country of operations.

Also, in Nigeria, Agusto & Co, one of the notable rating agency in the country, at its rating review of UBA Plc, upgraded the Bank rating from A+ to Aa- with a stable outlook. According to Agusto & Co, the rating of United Bank for Africa Plc (UBA) is upheld by the Bank improved capitalization, good liquidity and large pool of stable deposits, strong domestic presence supported by the Bank extensive branch network and growing alternative banking channels.

We note improvement in profitability and the Bank good asset quality. The Rating takes into cognizance the weak macroeconomic climate on the banking industry asset quality, which we do not expect UBA to be excluded. Nonetheless, we note positively its diversified geographical reach, which will cushion to an extent the impact of the weak Nigerian economic climate, Agusto & Co stated in its credit rating report.

Just as the credit rating agencies are strong on the fundamentals of UBA Plc, equity analysts have also affirmed the asset quality, profitability and broad investment case of the Bank, particularly as UBA has maintained an average return on equity of over 20 percent in the past three years. Following the strong financial performance of UBA in the first quarter of 2016.

The bank is the third largest lender in Nigeria and a leading provider of financial services across 19 African countries, and with presence in New York, London and Paris. The Bank serves almost 11 million customers across expansive brick and mortal branches as well as diversified alternative electronic banking channels.

UBA has a diversified shareholder base of over 270,000, with some of the greatest global fund managers as well as multilateral institutions like the International Finance Corporation (IFC) and African Development Bank (AfDB) being shareholders of the Bank.

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