Union Bank’s Long-Term Issuer Default Rating has been affirmed by Fitch Ratings at ‘B- with a stable outlook.
In a public statement titled “Fitch affirms Union Bank at “B-,” outlook stable,” the rating agency.
Short-term national ratings for the lender were raised from “F3 (nga)” to “F2” as well as the long-term national rating from “BBB- (nga)” to “BBB” (nga).
It was determined by rating agencies that Union Bank’s higher creditworthiness in comparison to other Nigerian issuers as well as the relative strength of its funding and liquidity profile accounted for the upgrade to the bank’s national ratings.
Union’s Long-Term IDR was influenced by its intrinsic creditworthiness, which was indicated by its “b-” Viability Rating,” according to the statement released by Fitch.
Union’s focus and attention to Nigerian operational environment hazards are also shown in the VR.
Stable funding and liquidity profiles, as well as enough profitability for the bank’s risk profile, help to keep everything in balance. “
Union’s credit profile risks are currently captured at the present rating level, with sufficient headroom under our base case to absorb the fallout from operating environment constraints, according to Fitch Ratings’ stable outlook.
According to the rating agency, “Union Bank’s National Ratings reflect its creditworthiness in relation to other Nigerian issuers and are driven by its independent strength.”.
In comparison to other Nigerian issuers, Union’s creditworthiness has improved as a result of the rating upgrading.
There are two possible options for a ‘BBB (nga)’ long-term national rating under Fitch’s criteria: the bank’s short-term national rating is the better option because of the relative strength in funding and liquidity that the bank has, which reduces its short-term local currency obligations default vulnerability in Nigeria.
At the end-first-half of this year, Union’s 16.1% overall capital adequacy ratio was slightly above the statutory minimum of 15% and was underwritten with N30bn in qualifying subordinated debt that matured in 2029 (equal to 17% of eligible capital).