The rating action reflects the strengthening of UCB's liquidity ratios, the increased growth of total capital and higher return on average assets in Q1 2018
Capital Intelligence Ratings (CI Ratings), has announced that it raised the national scale long-term rating of United Capital Bank(UCB) to 'suA-' from 'suBBB-'.
The upgrade is mainly a result of the revaluation gain arising from the change in the official exchange rate of the Sudanese Pound and the cancellation of the additional incentive rate.
The improvements are supported by the improved Islamic Financing Facilities (IFFs) and loss reserve coverage, notwithstanding the increase of the non-performing financings (NPFs) to gross IFF ratio.
Moreover, CI Ratings, said the rating is also supported by the partial lifting of US sanctions on Sudan, which may in turn lead to an improvement in correspondent bank relations and international transactions in the medium to long term.
The main constraining factors on the ratings are external to UCB itself ranging from geopolitical to sovereign risk factors and these include credit risk, recent devaluations, intense upward pressure on the SDG exchange rate, high and rising inflation, and a serious shortage of foreign exchange.
However, it is worth noting that the restrictions on imports imposed by the government have stopped the rapid depreciation of the Sudanese Pound in the parallel market.