Moody’s Investors Service (“Moody’s”), an international financial research company on bonds issued by commercial and government entities, has completed a periodic review of the ratings of Union Bank of Nigeria plc and other ratings that are associated with the same analytical unit.

The review was conducted through a portfolio review discussion held on 14 June 2021 in which Moody’s reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody’s practice has been to issue a press release following each periodic review to announce its completion.

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.

Key rating considerations are summarized below.

Union Bank of Nigeria Plc’s (Union) B2 long-term deposit ratings reflect its b3 baseline credit assessment (BCA) as well as a one notch uplift based on Moody’s assessment of a high probability of support from the Government of Nigeria in case of need.

Union’s b3 BCA reflects the bank’s sound capitalisation, stable deposit-based funding and solid local currency liquidity supported by the bank’s retail deposit franchise. However, these strengths are moderated by the challenging operating environment in Nigeria, combined with the bank’s high problem loans and elevated credit concentrations.