Agusto & Co. assigns an “A-” rating, with a ‘negative’ outlook to Union Bank of Nigeria Plc
The rating expires on 30 June 2021.
The rating assigned to Union Bank of Nigeria Plc (‘UBN’ or ‘the Bank’) reflects adequate capitalisation levels upheld by a good domestic brand franchise and shareholders’ support. The rating recognises a lower impaired loan ratio in the year under review, a good liquidity profile and refinancing capacity evidenced by the oversubscription of its bond issuances (Series 1, 2 and 3). Offsetting these positive rating factors are the current inimical macroeconomic environment triggered by the novel COVID-19 pandemic, pending issues in the Bank’s loan portfolio and profitability ratios that lag its contemporaries. The contractionary and unpredictable regulatory environment also threaten the performance of UBN and indeed the banking industry in the short term.
The negative outlook reflects the expected impact of the COVID-19 pandemic on the Bank’s performance in the near term. Agusto & Co. will continue to monitor unfolding events relating to the pandemic and review the outlook to reflect changes in the operating environment and UBN’s performance.
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