Fitch Ratings has affirmed the
Long-Term Issuer Default Ratings (IDR) of United Bank for Africa Cameroon (UBA
CAM), United Bank for Africa Senegal (UBA SEN) and United Bank for Africa Ghana
(UBA Ghana) at ‘B-’. The Outlooks are Stable.
A full list of rating actions is
listed at the end of this commentary.
The three banks are subsidiaries
of Nigeria’s United Bank for Africa Plc (UBA; B/Stable/b). UBA controls 100% of
UBA CAM, 86% of UBA SEN and 91% of UBA Ghana.
The Long-Term IDRs of UBA CAM,
UBA SEN and UBA Ghana are driven by their standalone financial strength, as
defined by their ‘b-’ Viability Ratings (VR), and are also underpinned by
Fitch’s view of potential support from UBA. The VRs of the three subsidiaries
are constrained by the weak environments in which they operate.
“The economies of the three
countries are fairly underdeveloped, banking sectors operate with large
single-name concentrations and limited capital buffers, in our view, and the
prudential regulations for banks, though improving, fall short of international
best practice guidelines. Fitch rates Cameroon ‘B’/Stable and Ghana
‘B’/Negative.
“The VRs also consider the banks’
limited franchises.
“Oil-related loans represent 30%
of UBA CAM’s loan portfolio. Performance indicators are strong at the banks,
particularly in UBA Ghana, and their balance sheets are liquid. This is
credit-positive because it provides some protection against the considerable
liquidity risks arising from notable asset and liability maturity gaps,” the
Fitch rating showed
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