Agusto & Co. Assigns Union Bank ‘A-’

Agusto & Co. has assigned Union Bank Plc and ‘A-’ rating.

The pan-African rating agency explained in a statement yesterday, that the latest rating on the bank would expire on 30 June 2019.

It stated that the rating assigned reflected the bank’s good capitalisation, ability to refinance, good brand equity, as well as an experienced management team. “The rating also takes into account the bank’s tangible efforts at resolving asset quality issues with significant write-offs and loan recoveries, which has resulted in a 55 per cent drop in non-performing loans as at 30 June 2018.

“In addition, the additional capital raised via a rights issue in 2017, as well as the use of technology to improve operations and mobilise deposits, will positively impact Union Bank’s financial performance in the near term.

“Union Bank like a number of the older banks, has weathered periods of adverse macroeconomic headwinds, industry boom & bust years, and legacy challenges. Shareholder support, alongside regulatory guides, at various times has led to positive strategic changes, thus enabling continued business activity,” it explained.

It however, pointed out that the rating agency recognises the role of digitalisation in the banking industry and indeed the wider economy.

“The ability to efficiently harness and retain a broad and active customer base has proven to be imperative to improving banks’ funding profile, while moderating operating expenses, given the elevated cost of doing business in Nigeria,” it added.