Banking
Fitch Downgrades Union Bank’s National Rating to ‘BBB-(nga)’
By Dipo Olowookere
The National Long-Term Rating of Union Bank of Nigeria Plc’s BBB(nga) has been downgraded to BBB-(nga) by Fitch Ratings.
In a statement issued by the rating agency, it however, said the lender’s Long-Term Issuer Default Rating (IDR) has been affirmed at ‘B-‘ with stable outlook.
Fitch said the downgrade of Union Bank’s National Long-Term Rating mainly reflects its view of weaker asset quality relative to Nigerian peers’, as highlighted by the bank’s disclosure under IFRS 9.
According to the statement released on Tuesday, the rating company said the IDRs of Union Bank are driven by its standalone creditworthiness, as defined by its Viability Rating (VR).
Union Bank’s VR, as with that of other Nigerian banks, is highly conditioned by Nigeria’s operating environment, with the fragile economic recovery restraining banks’ growth prospects and asset quality, Fitch said.
It added that the financial institution’s VR further reflects a moderate franchise, weak profitability, severe loan-quality problems and adequate capitalisation, funding and liquidity.
However, it noted that the stable outlook reflects Fitch’s base case expectation that Union Bank’s credit profile is unlikely to change significantly over the next one-to-two years.
Union Bank’s operations are concentrated in Nigeria and the lender accounted for 4 percent of banking system assets at end-2017.
Union Bank’s stock of impaired loans is declining, the statement noted, as is its exposure to the troubled oil sector. However, the bank’s impaired loans (stage 3 loans under IFRS 9) ratio (24% at end-1H18) is very high compared with the 9.4% average for rated Nigerian banks, driven primarily by its oil sector exposure, it added. Stage 2 loans measured at a further 30 percent of gross loans at end-1H18. Reserve coverage of impaired loans (32% at end-1H18) is low, reflecting management’s view of collateral on impaired loans, Fitch said.
Furthermore, the rating firm said Union Bank is exposed to large credit concentrations. The 20-largest loans measured at 71 percent of gross loans and 128 percent of Fitch Core Capital (FCC) at end-1H18. The volatile oil sector represented 45 percent of Union Bank’s gross loans at end-1H18.
Union Bank’s operating profit/risk-weighted assets ratio was 1.8 percent in 2017 (compared with rated-banks average of 4 percent), which is weak by emerging market standards.
The bank has a high net interest margin, but this is offset by a high cost-income ratio and large loan impairment charges that have eroded around 55 percent to 65 percent of pre-impairment operating profit in recent years.
Capital metrics are somewhat better than similarly-sized peers’, having improved following a rights issue in 2017, Fitch said. However, as a result of IFRS 9 implementation from this year, Union Bank’s FCC ratio declined to 24 percent at end-1H18 (end-2017: 31 percent), the company added.
Union Bank’s high FCC ratio must be considered in the context of the bank’s large unreserved impaired loans, which measured at 45 percent of FCC at end-1H18.
Union Bank benefits from a strong retail deposit base, which accounted for 52 percent of customer deposits at end-1H18, providing an inexpensive source of stable funding. Single-depositor concentration is in line with peers’, with Union’s 20-largest deposits accounting for 21% of the total at end-1H18. Union Bank’s loans/customer deposits ratio (62 percent at end-1H18) sits at the lower end of the peer group.
Foreign-currency liquidity has been tight in recent years, with Union Bank restructuring some trade finance obligations with international correspondent banks in 2015 and 2016. Foreign-currency liquidity pressures have eased and are no longer a significant rating weakness.
Fitch said it believes that sovereign support to Nigerian banks cannot be relied upon given Nigeria’s weak ability to provide support, particularly in foreign currency. In addition, it said there are no clear messages of support from the authorities regarding their willingness to support the banking system.
“Therefore, the Support Rating (SR) and Support Rating Floor (SRF) are ‘5’ and ‘No Floor’, respectively. This reflects our view that senior creditors cannot rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable,” the statement said.
It further noted that Union Bank’s Long-Term IDR is sensitive to a change in the bank’s VR. Downside pressure is most likely to result from a material worsening of impaired loans, including the migration of stage 2 loans into the stage 3 category, putting pressure on capital adequacy. A positive rating action is unlikely in the foreseeable future.
“Union’s National Ratings are sensitive to a change in the bank’s creditworthiness relative to Nigerian peers,” the statement said.
By Adedapo Adesanya
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, says Nigeria anticipates remittances from citizens living abroad to increase by two-thirds in 2026 as it seeks to bolster its foreign-exchange reserves to $1 billion monthly.
“We are expecting that by the end of the year, we will hit about a billion Dollars a month from diaspora remittances,” he said at the 14th Annual BusinessDay CEO Forum in Lagos on Thursday, themed From Stability to Shared Prosperity.
Mr Cardoso said remittances are expected to be boosted from more than $600 million currently, banking on the CBN’s deliberate target at remittances to diversify reserve sources beyond oil earnings.
According to him, the apex bank engaged Nigerians abroad, banks and international partners to identify barriers to official remittance flows.
He said the lender subsequently reviewed policies to ensure easier movement of funds into and out of the country.
Mr Cardoso described the approach as providing free entry and free exit for foreign exchange.
He said the reforms helped double diaspora inflows within one year and exceeded initial expectations, also projecting annual remittances could reach about $8 billion if the current momentum was sustained, adding that the development reflected growing confidence in Nigeria’s financial system and foreign exchange market.
Mr Cardoso said reforms introduced by the apex bank had restored stability in the foreign exchange market and improved investors’ confidence.
He identified exchange rate unification as one of the central bank’s major achievements under the reforms programme.
According to him, replacing multiple exchange rate windows with a market-driven system eliminated distortions and improved transparency.
Mr Cardoso said improved foreign exchange liquidity and stronger reserves were among the gains from the reforms.
He said Nigeria’s net external reserves had risen from about $3 billion at the start of the reforms to above $40 billion currently, noting that gross external reserves had grown to about $52 billion, representing about 10 months of import cover.
According to him, the reserves are designed to shield the economy from external shocks and excessive market volatility.
He said the reserves were not meant for routine interventions or day-to-day exchange rate management.
By Modupe Gbadeyanka
The flagship banking subsidiary of Guaranty Trust Holding Company (GTCO) Plc, Guaranty Trust Bank (GTBank) Limited, has been announced as the winner of Nigeria’s Best Digital Bank award at the Euromoney Awards for Excellence 2026.
The lender clinched this accolade at the Euromoney Awards for Excellence 2026 ceremony, held on July 17, 2026, at The Peninsula London, England, for its outstanding performance, innovation, customer service, and leadership.
GTBank’s recognition as Nigeria’s Best Digital Bank reflects its continued leadership in digital innovation and its commitment to delivering seamless, secure, and customer-centric financial solutions.
As the banking franchise of GTCO, GTBank has consistently set industry benchmarks in digital transformation, pioneering solutions that have redefined how individuals and businesses access, manage, and experience financial services.
Over the years, GTBank has transformed the banking experience through a suite of innovative digital platforms, including the GTWORLD mobile app and solutions that provide millions of customers with seamless, secure, and convenient access to financial services.
The bank continues to strengthen its digital capabilities by introducing products and services that meet evolving customer needs while maintaining the highest standards of security, reliability, and service excellence.
This latest recognition underscores the company’s position as a market leader and reflects its sustained investment in technology, operational excellence, and innovation.
“This recognition is a testament to the legacy upon which GTBank was built and the vision that continues to guide us today.
“From inception, our goal has been to deliver on the Group’s vision to make end-to-end financial services accessible to everyone by leveraging technology to remove barriers, simplify experiences, and create meaningful value for our customers,” the chief executive of GTBank, Mrs Miriam Olusanya, stated.
“While we are honoured by this recognition, we see it as an acknowledgement of what we have achieved and a motivation to do even more.
“We remain focused on raising the bar for digital banking, investing in innovative solutions, and delivering exceptional experiences that create lasting value for our customers.
“As the financial services landscape continues to evolve, we will continue to innovate, adapt, and lead with the same commitment to excellence that has defined our franchise for decades,” she added.
The Euromoney Awards for Excellence 2026 convened leading financial institutions, industry executives, and policymakers from across the globe to celebrate excellence, innovation, and leadership in the financial services sector.
By Aduragbemi Omiyale
A collaboration to enable fast money transfers into Nigeria has been entered into between Flutterwave and Xoom, PayPal’s international digital money transfer service.
The partnership allows Xoom transfers to be converted by Flutterwave and settled locally in Naira, enabling quick transfers directly into recipients’ bank accounts at Access Bank, UBA, Zenith Bank, First Bank, GTBank, and additional participating banks across Nigeria.
The deal also enables Xoom’s global network with Flutterwave’s local payout infrastructure, allowing users globally to send funds directly into Nigerian bank accounts with improved speed and efficiency.
Nigeria is the leading remittance recipient in Sub-Saharan Africa, receiving over $20 billion in personal remittances in 2024. Despite this volume, receiving international payments has historically remained complex due to FX constraints and settlement delays. This collaboration helps address those challenges in a market of more than 232 million people, where the ICT sector is projected to contribute 21 per cent of GDP by 2027.
By combining Xoom’s expansive reach with Flutterwave’s local compliance and banking partnerships, the two companies are providing a more accessible financial corridor for the continent.
Xoom, a PayPal service, is a fast and secure international digital money transfer service that enables consumers to send money, pay bills, and reload phones for friends and family in approximately 160 markets globally.
As part of PayPal’s global payments ecosystem, Xoom leverages advanced fraud protection, compliance capabilities, and a trusted global network to help millions of customers move money quickly and securely across borders.
“We’re excited to have been chosen by Xoom for their Nigeria expansion. Millions of Nigerians rely on money from abroad to support everyday needs, whether it’s families receiving help from loved ones, freelancers getting paid for their work, or individuals earning income from the global economy. This helps make it easy and more reliable for people in Nigeria to receive funds and stay connected to opportunities beyond borders,” the chief executive of Flutterwave, Mr Olugbenga GB Agboola, stated.
