UBA stocks have potential to grow this year, says RenCap, CSL stockbrokers

By ODUNEWU SEGUN

THE United Bank for Africa has been given a clean bill of health by two leading investment firms, Renaissance Capital and CSL stockbrokers.
In a recent statement, the two investment firms placed a ‘Buy’ rating on the bank, stating that the bank has strong potential to generate returns of more than 100n 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, was bullish on UBA stocks forecasting that the bank’s share price could rise to N9.40 per, while CSL Stockbrokers, a member of FCMB Group, said UBA could trade at N7.21 per share in the next 12 months.

The stock closed at N4.60 on Monday. However, on the average, analysts’ consensus target price is N8.50 per share for UBA for the 2016 business year.

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Some market operators said the strong investment case for UBA 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 1.74% as at the end-March 2016.

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, Agusto& Co, upgraded the bank’s rating from “A+” to “Aa-“, with a stable outlook.

According to Agusto& Co, “the rating of UBA is upheld by the bank’s improved capitalsation, good liquidity and large pool of stable deposits, strong domestic presence supported by the Bank’s extensive branch network and growing alternative banking channels.