United Bank for Africa PLC

The stable outlook on UBA reflects that on Nigeria (B-/Stable/B). We would lower the ratings on UBA over the next 12 months if we took a similar action on Nigeria. If we were to upgrade Nigeria we would likely upgrade the bank. S&P Global Ratings classifies the banking sector of Nigeria in group '10' under its Banking Industry Country Risk Assessment (BICRA). Countries in group '10' include Ukraine, Belarus, Russia, Sri Lanka, and Tunisia. Other peers such as Argentina, Egypt, Kazakhstan, and Azerbaijan are in group '9'. We use our BICRA economic risk and industry risk scores to determine a bank's anchor, the starting point in assigning an issuer credit rating. The anchor for banks operating only in Nigeria is

...Our ratings on United Bank for Africa PLC (UBA or the group) are constrained by the sovereign credit rating on Nigeria. The group's stand-alone credit profile (SACP) of 'b+' reflects the 'b' blended anchor and the bank's strong business position. We do not rate Nigerian banks above the sovereign because of the likely direct and indirect influence of a sovereign distress on banks' operations including their ability to service foreign currency obligations. The group's strong business and geographic diversification support its earnings stability. The group has extensive retail and corporate banking operations domestically and across its pan-African franchise. Its expanding agency banking network and digital channels have continued to drive down the cost of funds while increasing transaction volumes, thereby supporting nonfunded revenues. Group revenue has been resilient through the cycles because the business model focuses on trade finance, payments, and cash management services, which underpin...

Full Report