The affirmation takes into account both the bank’s vulnerabilities and strengths. On the negative side, UBN continues to face weak capitalisation and a heightened risk profile. Its capital adequacy ratio has fallen below the regulatory minimum of 10% for the last three years, with the core capital ratio standing at 9.9% as of June 30, 2025—positioning it in the lower band of GCR’s assessment.
Analysts at GCR noted that ongoing capital-raising initiatives aimed at meeting the regulatory requirements for its current banking licence could improve the bank’s capital position over the next 12 months, assuming no material setbacks from the expiration of regulatory forbearance.
The bank’s risk profile also remains a concern, marked by significant concentration risks across obligors, loan stages, foreign currency exposure, and sectors. The twenty largest borrowers accounted for 79.2% of gross loans as of June 2025, up from 74.9% in 2024, with four exceeding the single obligor limit of 20% of shareholders’ funds. Analysts noted that the impending capital injection could help remedy this breach.
Foreign currency loans remain high, representing 60.6% of gross loans, largely restructured stage 2 loans concentrated in the oil and gas sector. These stage 2 loans—which account for 65.6% of the portfolio—currently benefit from regulatory forbearance, but the end of such relief could negatively affect the bank’s risk profile and asset quality metrics.
Despite these challenges, UBN’s competitive position is a key strength. The bank benefits from a long operating history, strong domestic brand recognition, and a balance sheet of NGN4.1 trillion (USD2.8 billion) as of June 2025, roughly 2.8% of the total Nigerian banking sector assets. Operating revenues are stable, with net interest income contributing 84.7% and non-interest income 15.3% of total revenue.
GCR highlighted UBN’s efforts to strengthen its value proposition through digitalisation, planned capital injection, and the approved business combination with TTB as factors that could bolster earnings and competitiveness over the next 12 to 18 months.
Funding and liquidity are also positive rating factors. Customer deposits remain the primary funding source, representing 94.9% of total funding as of June 2025, despite a 4% decline to NGN2.9 trillion (USD2.0 billion) due to the deliberate reduction of expensive term deposits. Current and savings account (CASA) deposits accounted for 80.8% of total deposits, slightly down from 81.2% in 2024, helping lower the cost of funds from 9.4% in December 2024 to 7.5% by mid-2025.
Deposit concentration has also eased, with the top twenty depositors accounting for 26.9% of total deposits, down from 30.9% in FY2024, reflecting a more diversified funding base. Liquidity remains robust, with liquid assets covering wholesale funding and customer deposits by 8.4 times and 44.7%, respectively.
GCR concluded that the evolving outlook reflects the potential for significant changes in UBN’s financial and operational profile over the next 12 to 18 months, following the planned consolidation with TTB, regulatory-driven recapitalisation, and the possible end of regulatory forbearance.