Globally acclaimed rating agency, Fitch Ratings has upgraded the long-term Issuer Default Rating (IDR) of UBA Ghana to “B” from “B-“, with stable outlook.
Fitch also upgraded UBA Ghana’s Support Ratings (SR) to “4” from “5”. The rating action follows the upgrade of the parent Bank, United Bank for Africa (UBA) Plc’s Long Term IDR upgrade to “B+” from “B” in November 2018. The bank’s Viability Ratings (VR) of “b-“ was however unaffected by this rating action.
UBA Ghana’s IDR’s are now driven solely by potential institutional support from UBA Plc. Previously, the IDR’s were driven by the standalone creditworthiness of the Bank, as defined by its ‘B-‘ VRs, and underpinned by support from UBA Plc. Fitch’s assessment is that UBA Plc’s ability to provide support, if required, has improved, given the group’s improving financial profile, reflected in the upgrade of UBA Plc’s ratings.
According to Fitch, UBA Ghana is a fairly large subsidiary of UBA Plc, representing 5.3% of consolidated group assets at the end of September 2018. The bank remains an integral part of UBA Plc’s Western African franchise and is strategic to the development of the Group’s Pan-African strategy.
Fitch notes, “We rate UBA Ghana one notch below its parent to reflect potential regulatory restrictions in Nigeria and the Transfer and Convertibility (T&C) risk in Ghana which could make it difficult for UBA Plc to provide timely and sufficient support. UBA Ghana’s Long-Term IDR is also constrained by Ghana’s ‘B’ Country Ceiling, which captures Fitches view of transfer and convertibility risk (T&C) risk in the country”.
Following this upgrade, UBA Ghana’s rating ranks at par with the sovereign rating and is the highest rating currently attainable by any local corporate entity in Ghana.
“This upgrade reflects our strong fundamentals as a premium bank in Ghana. We are confident that the consistent improvement in our key financial metrics, liquidity and capitalisation, will continue to increase customer confidence in doing business with us”, Mrs Abiola Bawuah, RCEO UBA West Africa 1, commented.
The UBAG has also proven to be self- sustainable as demonstrated by its ability to meet the regulatory minimum paid up share capital of GHS400 million without seeking extra support from the parent company.
Source: 3news.com | Ghana]]>
