Banking
Union Bank Asset Quality Significantly Weak—Fitch
By Dipo Olowookere
Foremost rating agency, Fitch Ratings, has disclosed that its assessment has shown significant weakness in Union Bank’s asset quality measures.
Fitch made this known in a statement issued last week, where it announced affirming Union Bank of Nigeria Plc’s Long-Term Issuer Default Rating (IDR) at ‘B-‘ with stable outlook.
In the statement, the rating firm said it also affirmed the bank’s Viability Rating (VR) at ‘b-‘ and Support Rating at ‘5’.
It said the Nigerian lender, which has a market share of about 4 percent, has IDRs, driven by its standalone creditworthiness, as defined by the VR, that are constrained by Nigeria’s operating environment and factor in a high impaired loans ratio, some weakness in loan loss reserve cover, which puts pressure on capital adequacy and performance metrics which, although improving, are still impacted by high loan impairment charges.
However, it noted that risk appetite is now lower and management was focusing on loan restructuring and recoveries.
Fitch said in Union Bank’s well-established brand helps to attract cheap retail deposits that make up 60 percent of its deposit funding.
It added that corporate lending represents around 70 percent of loans but Union Bank’s strategy is to establish itself as a leading mid-tier bank in Nigeria, developing deeper customer relationships particularly in the corporate and SME segments, and ultimately expand its retail lending capabilities.
This expansion is likely to be supported by shareholders, particularly Atlas Mara Limited, which owns around 21 percent of the bank, a financial company whose primary goal is to support retail banking across the African continent, the rating agency said.
During the initial years under new ownership (2011- 2015), risk appetite at Union Bank was high, Fitch pointed out, stressing that this resulted into a loan portfolio that is highly concentrated on the oil sector (38 percent of loans).
“Our assessment shows significant weakness in asset quality measures. Impaired loans represent around 9% -10% of gross loans.
In addition, the bank has a high level of non-performing and restructured loans not captured in the impaired loan ratio.
Loan loss reserve cover, at around 80% of impaired loans, exposes the bank to unexpected losses even after factoring in the availability of collateral for some large impaired loans,” Fitch said in the statement obtained by Business Post.
It said the lender’s management’s focus on recoveries and loan restructuring is showing positive initial signs but the sustainability of these trends will be assessed over time.
Union Bank’s margins compare favourably with peers’ and overall operating profit metrics are broadly in line with peers’. Operating profit reflects some pressure on efficiency ratios impacted by the cost of maintaining a large branch network and the impact of inflation, it said further.
Fitch noted that Union Bank’s funding profile is improving, pointing out that customer deposits are growing steadily, reliance on interbank deposits is declining and all public sector deposits have been repaid, in line with local requirements.
It further said Union Bank’s foreign currency (FC) liquidity position was tight in 2016 and, along with several Nigerian peers, and the bank restructured some trade finance obligations with international correspondent banks.
“These are being repaid in line with restructured terms, but our assessment is that the bank’s FC liquidity position remains tight. The bank’s history of accessing term FC funding under new management is limited to a small number of counterparts,” it said.
Fitch said in the statement that given asset quality challenges, capital ratios have become strained.
It pointed out that Union Bank raised N49.7 billion of Tier 1 capital in 4Q17 and it believes that prudential capital shortfalls have been addressed.
“However, capital levels may still not be commensurate with risk despite the capital injection, largely because unreserved impaired and non-performing loans still represent a high proportion of equity,” it stressed.
The statement said Union Bank’s National Ratings reflect the bank’s creditworthiness relative to the country’s best credit and to peers operating in that country.
“Fitch believes that sovereign support to Nigerian banks cannot be relied on given Nigeria’s (B+/Negative) weak ability to provide support, particularly in FC. In addition, there are no clear messages from the authorities regarding their willingness to support the banking system.
“Therefore, the Support Rating Floor of all Nigerian banks is at ‘No Floor’ and all Support Ratings are at ‘5’.
“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 bank’s IDRs, National Ratings and VR are primarily sensitive to either improvements or deterioration in asset quality and capital adequacy. Given the extent of Union’s asset quality pressures, upside is limited at present,” the rating company disclosed.
By Adedapo Adesanya
The Senate has demanded detailed explanation from the Central Bank of Nigeria (CBN) over the alleged non-remittance of N1.44 trillion in operating surplus.
The Senate Committee on Banking, Insurance and Other Financial Institutions, chaired by Mr Tokunbo Abiru, opened its statutory briefing with a firm call for transparency at the apex bank, noting that the Auditor-General’s query on the unremitted funds required a full, clear and documented response, insisting that public trust in monetary governance depended on strict accountability.
While acknowledging the CBN’s achievements in stabilising the foreign exchange market and reducing inflation, Mr Abiru underscored that such progress must be accompanied by institutional responsibility.
He stated the Senate expected the CBN to explain the circumstances surrounding the query, outline corrective steps taken and reveal safeguards against future lapses.
This came as the Governor of the central bank, Mr Yemi Cardoso, appeared before the senate committee and offered an extensive review of economic conditions, asserting that Nigeria was experiencing renewed macroeconomic stability across major indicators.
Mr Cardoso attributed the progress to bold monetary reforms, foreign-exchange liberalisation and disciplined liquidity management implemented since mid-2025.
According to him, headline inflation had declined for seven consecutive months, from 34.6 per cent in November 2024 to 16.05 per cent in October 2025, marking the steepest and longest disinflation trend in over a decade.
Food inflation accruing to him also slowed to 13.12 per cent, supported by improved supply conditions and exchange-rate predictability.
The CBN governor described the foreign-exchange market as fundamentally transformed, adding that speculative attacks and arbitrage opportunities had largely disappeared.
According to him, the premium between the official and parallel markets had fallen to below two per cent, compared to over 60 per cent a year earlier. As of November 26, the naira traded at N1,442.92 per dollar at the Nigerian Foreign Exchange Market, stronger than the N1,551 average recorded in the first half of 2025.
He also announced a sharp rise in external reserves to $46.7 billion, the highest in nearly seven years and sufficient to cover over ten months of imports.
Diaspora remittances, he noted, had tripled to about $600 million monthly, while foreign capital inflows reached $20.98 billion in the first ten months of 2025, 70 per cent higher than in 2024 and more than four times the 2023 figure.
Cardoso further confirmed that the CBN had fully cleared the $7 billion verified FX backlog, restoring investor confidence and strengthening Nigeria’s balance-of-payments position.
On banking-sector stability, he reported that recapitalisation efforts were progressing smoothly. Twenty-seven banks had already raised new capital, with sixteen meeting or surpassing the new regulatory thresholds ahead of the March 31, 2026 deadline, highlighting improvements in ATM cash availability, digital-payments oversight and cybersecurity compliance.
Despite the positive indicators, the Senate sought clarity on several policy decisions.
Mr Abiru pressed for explanations on the sustained 45 per cent Cash Reserve Ratio (CRR), the 75 per cent CRR applied to non-Treasury Single Account public-sector deposits, FX forward settlements, mutilated naira notes in circulation, excessive bank charges, failed electronic transactions and the compliance of CBN subsidiaries with parliamentary oversight.
He also requested an update on the activities of the Financial Services Regulatory Coordinating Committee, arguing that stronger inter-agency cooperation was necessary to maintain public confidence.
The session later moved into a closed-door meeting.
By Modupe Gbadeyanka
About N3.6 trillion has been repaid to the Central Bank of Nigeria (CBN) by the Asset Management Corporation of Nigeria (AMCON) since its inception in 2010.
This information was revealed by the chief executive of AMCON, Mr Gbenga Alade, during a media parley to update the press on the activities of the agency.
Mr Alade said at the moment, the organisation still owes the central bank about N3 trillion for toxic assets of banks in the country.
He praised the organisation for its asset recovery drive, stressing that when compared with others across the world, Nigeria has done well.
“It is important to stress that the corporation has done tremendously well, especially when compared to other notable government-owned Asset Management Corporations around the world.
“Based on the balance at purchase, AMCON outperformed other Asset Management Corporations all over the world by achieving over 87 per cent in recoveries despite the unique challenges associated with debt recovery in Nigeria.
“The Malaysian Danaharta, which is adjudged one of the best performing Asset Management Corporation’s, only achieved 58 per cent. The Chinese Asset Management Corporation, despite its stricter laws, achieved just 33 per cent.
“Only the Korean Asset Management Corporation (KAMCO), South Korea, has achieved more recoveries than AMCON, with about 100 per cent. This was due to their brute force with which they chased the obligors.
“Despite KAMCO’s recovery records, the agency is still operational to date with slight realignments in its mandate.
“Other noted Asset Management Corporations that have transitioned into a perpetual institution of the various governments include, China Asset Management Company, Federal Deposit Insurance Corporation (FDIC) USA, and KFW Germany.
“So, gentlemen, without sounding immodest, AMCON has done well, and we will not relent until all the outstanding debts are fully realized,” Mr Alade stated.
On the financial performance of AMCON, he said last year, the firm posted a revenue of N156.25 billion and operating expenses of N29.04 billion, while for the 2025 fiscal year should be a revenue of N215.15 billion and operating expenses of N29.06 billion.
By Modupe Gbadeyanka
One of the non-interest banks in Nigeria, The Alternative Bank (AltBank), has opened a new branch in Effurun, Delta State.
The new office will serve the Edo-Delta region and provide purposeful banking and real financial empowerment for individuals, entrepreneurs, and businesses, a statement from the firm stated.
The lender disclosed that the Effurun branch is a bold move in its mission to reshape banking in Nigeria.
The launch was graced by key dignitaries, including the Ovie of Uvwie Kingdom, Emmanuel Ekemejewa Sideso Abe I; the Chairman of Uvwie Local Government, Anthony O. Ofoni, represented his vice, Andrew Agagbo; and the Special Adviser to the Governor of Delta State on Community Development, Mr Ernest Airoboyi; amongst others.
The Divisional Head for South at The Alternative Bank, Mr Chukwuemeka Agada, emphasised the institution’s commitment to Warri and its surrounding communities.
“By establishing a presence here, we are initiating a transformation in the way banking serves the people of Delta. Our purpose-driven approach ensures that customers’ financial goals are not just met but exceeded,” he stated.
“This branch represents our pledge to empower Warri’s dynamic businesses and families, providing them with the tools to grow without compromise,” Mr Agada added.
“We understand the heartbeat of this community, and we are excited to integrate our bank into the fabric of this dynamic region,” he stated further.
On his part, the representative of the Ovie, Mr Samuel Eshenake, challenged the bank to facilitate development and employment within the Effurun community.
The Regional Head for Edo/Delta at The Alternative Bank, Mr Akanni Owolabi, embraced this challenge, pledging that the bank will work sustainably to drive local commerce.
“At The Alternative Bank, we are committed to being an active partner in the development of Effurun. We see this branch as a catalyst for creating opportunities, driving employment, and supporting the growth of local businesses.
“Our mission is to empower this community, ensuring that every step forward is one of progress, prosperity, and shared success.”
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