Fitch Affirms UBA’s Rating at ‘B’, Outlook Stable

Nume Ekeghe

International rating agency, Fitch Ratings has affirmed United Bank for Africa (UBA) Plc’s Long-Term Issuer Default Rating (IDR) at ‘B’ with a Stable Outlook, just as it also affirmed its Viability Rating (VR) at ‘b’ and National Long-Term Rating at ‘A+(nga)’. 

Fitch in its rating note said it has withdrawn UBA’s Support Rating and Support Rating Floor as they are no longer relevant to the agency’s coverage following the publication of its updated Bank Rating Criteria on 12 November 2021. “In line with the updated criteria, we have assigned UBA a Government Support Rating (GSR) of ‘no support’ (ns).

“UBA’s IDRs are driven by its standalone creditworthiness, as reflected in its ‘b’ VR. The VR considers UBA’s exposure to the Nigerian volatile operating environment, but also the bank’s healthy profitability and adequate capitalisation, which provide reasonable capacity to absorb losses from an economic downturn.”

It noted that UBA’s National Ratings are driven by the bank’s standalone strength. “They are lower than the highest rated Nigerian banks’ due to UBA’s relatively softer through-the-cycle financial metrics.” The rating whilst believing that UBA’s ability to capitalise on business and trade flows and attract deposits across the continent is a competitive advantage relative to peers’, Fitch said rising global risks will weaken domestic operating conditions. “Inflation is expected to remain stubbornly high, posing downside risks to our real GDP growth forecasts of 3.1 and 3.3 per cents in 2022 and 2023, respectively. However, downside risks are mitigated by strong oil prices that should also underpin growth in non-oil sectors and banks’ asset quality.”