UBA Ghana’s Long-Term Issuer Default Rating has been upgraded to ‘B’ from ‘B-‘ and Viability Rating to ‘b’ from ‘b-‘.

The Outlook on the Long-Term Issuer Default Rating is also stable.

According to ratings agency, Fitch, the upgrade reflects the strengthening of the bank’s capitalisation and leverage, as reflected in the increase in its tangible common equity/tangible assets ratio to 26% at the end of September 2020, from 18% at the end of 2019.

That is notwithstanding heightened operating environment risks from the global pandemic.

“The ratings reflect the concentration of the bank’s operations in the volatile Ghanaian operating environment, extremely high levels of impaired loans and company profile weaknesses. In addition, the ratings consider the bank’s comfortable, and strengthened capital position, underpinned by its strong profitability, and solid liquidity position”, the ratings agency noted.

According to Fitch, the Ghanaian economy has fared comparatively well in the face of the pandemic and Fitch expects real GDP growth of 2% in 2020, recovering to 5% in 2021.

UBA Ghana’s company profile is weakened by limited business model stability, as reflected in high earnings volatility and sizeable shifts in balance sheet composition, Fitch noted.

“UBA Ghana has small market shares of assets and customers deposits (2% and 3%, respectively, at the end of September 2020) but its franchise benefits from being a subsidiary of United Bank for Africa Plc (UBA Plc; B/Stable), a pan-African banking group”.

“We expect the bank’s market shares to increase moderately over the next two years as management pursues an ambitious growth strategy”, it stressed.