Fitch Upgrades UBA Ghana’s Viability Rating
Fitch Ratings has upgraded United Bank for Africa (Ghana) Limited’s (UBA Ghana) Viability Rating (VR) to ‘b-‘ from ‘ccc+’, it said in a new rating note. UBA Ghana’s Long-Term Issuer Default Rating (IDR) has been affirmed at ‘B-‘ with a stable outlook.
The rating action follows the upgrade of Ghana’s Long-Term Foreign-Currency IDR to ‘B-‘, from ‘RD’ (Restricted Default), and Long-Term Local-Currency IDR to ‘B-‘, from ‘CCC+’, on 16 June 2025. According to Fitch, the upgrade of the VR primarily reflects reduced solvency risks due to a lower likelihood of another default on the sovereign’s local-currency debt.
This improvement is attributed to better debt servicing conditions in local currency, as well as the country’s normalisation of relations with a significant majority of external commercial creditors.
UBA Ghana’s long-term IDR is driven by its standalone creditworthiness, as expressed by its VR, and underpinned by potential support from its Nigeria-based parent, United Bank for Africa Plc, as reflected in its Shareholder Support Rating (SSR) of ‘b-‘.
The VR balances UBA Ghana’s moderate franchise and large exposure to the sovereign against its high profitability and large capital and liquidity buffers.
Ghana’s real GDP growth accelerated to 5.7% in 2024 from 2.9%in 2023 and is forecast at 4% in 2025, and 4.5% in 2026. The Ghanaian cedi has appreciated significantly, which we forecast will contribute to a sharp reduction in inflation.
Strong profitability and the currency appreciation have improved the banking sector’s capitalisation, positioning it well for the end of regulatory reliefs at end-2025.
Sovereign exposure, largely through fixed-income securities, it was over 290% of equity in Q1-2025, which Fitch considered to be high, including new sovereign bonds and new cocoa bonds received in the Domestic Debt Exchange Programme.
It also includes restructured Eurobonds and treasury bills not subject to the restructuring. UBA Ghana’s impaired loans ratio decreased to 12.5% at end-2024 (end-2023: 24.7%) due to write-offs and recoveries.
The significance of loan-quality risks is diminished by a small loan book (end-1Q25: 9% of total assets), with broader asset quality more closely aligned with the sovereign’s creditworthiness.
Operating returns on risk weighted assets averaged a high 4.5% between 2021 and 2024, despite the effects of the sovereign default, mainly driven by high yields on government fixed-income securities.
Capital buffers remain comfortable to tolerate asset-quality deterioration and support planned strong loan growth from a low base.
Fitch estimates that UBA Ghana would meet capital requirements without regulatory forbearance, even if it used a higher discount rate to value new bonds received in the Domestic Debt Exchange Programme.
Customer deposits represented 93% of UBA Ghana’s non-equity funding at end-1Q25. Cedi liquidity, excluding government securities, is adequate, with cedi cash and bank balances — including mandatory reserves — covering 46% of cedi customer deposits at end-2024. Foreign-currency cash and bank balances covered 69% of foreign-currency customer deposits at end-2024.
UBA has a high propensity to provide support to UBA Ghana, given its strategic importance to the group’s regional network.
However, the parent’s ability to provide support is conditioned by its creditworthiness, as expressed by its Long-Term IDR of ‘B’. The one notch difference between its Long-Term IDR and UBA Ghana’s SSR reflects the latter’s small contribution to group assets (end-2024: 3.4%).
