Renaissance Capital and CSL Stockbrokers have both placed a “BUY” rating on United Bank for Africa (UBA) Plc, saying it is capable of generating returns of more than 100 per cent in the next 12-month period.
The “buy” rating on UBA, underlines its attractiveness despite the general downward trend at the stock market.Renaissance Capital, in its recommendation forecasted that the bank’s stocks would remain bullish, adding that its share price could rise to N9.40 per share. CSL Stockbrokers, a member of FCMB Group, also expressed optimism that UBA could trade at N7.21 per share in the next 12 months.
On the average, analysts’ consensus target price is N8.50 per share for UBA for the 2016 business year. The strong investment case for UBA, according to a statement by the bank, followed the recent affirmation of its credit rating by Fitch as well as an upgrade by Agusto & Co.
Fitch International, one of the foremost global rating agencies affirmed the bank’s viability rating at “B” an affirmation of its strong risk management framework, which has helped keep non-performing loans ratio at a moderate level of 1.74per cent as at the end-March 2016, as against industry average of over 6 per cent, as reported by Fitch in its recent report on Nigerian banks.
Fitch also upgraded UBA’s outlook to stable from Negative, thus reinforcing the strong outlook on the Bank, especially as its diversified network across eighteen other African countries make it relatively immune against the potential cyclical volatilities in any of its country of operations.
Also, the foremost local rating agency in Nigeria, Agusto & Co, at its rating review of UBA Plc, upgraded the Bank’s rating from “A+” to “Aa-“, with a stable outlook.
According to Agusto & Co, “the rating of United Bank for Africa Plc (UBA) is upheld by the Bank’s improved capitalization, good liquidity and large pool of stable deposits, strong domestic presence supported by the Bank’s extensive branch network and growing alternative banking channels.
“We note improvement in profitability and the Bank’s good asset quality. The Rating takes into cognizance the weak macroeconomic climate on the banking industry’s asset quality, which we do not expect UBA to be excluded.
“Nonetheless, we note positively its diversified geographical reach, which will cushion to an extent the impact of the weak Nigerian economic climate,” Agusto & Co stated in its credit rating report.”The bank also sealed a five- year deal Master Card that would enable it issue MasterCard credit, debit and prepaid cards across 19 markets in Africa.
The synergy would also focus on increased payments infrastructure across Africa, including the roll out of point-of-sale and Mobil technology, to ensure merchants accept the cards when introduced into these markets.
The Group Managing Director-Designate, of the bank, Kennedy Uzoka explained that through the partnership, the bank was able to accelerate the drive for financial inclusion and economic wellbeing across the African continent.
“As the needs of our customers change, we are adapting through strategic innovations and partnerships to provide them with excellent and convenient services.”
The Division President for Sub-Saharan Africa, MasterCard, Daniel Monehin noted that the focus on infrastructure and the roll out of easy-to-access solutions was a key driving force for financial inclusion.
He added that MasterCard’s continued innovation in the payments space with UBA’s extensive pan-African network would mean the introduction of increased competition and stronger financial sector in the regions.
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