Moody’s Investors Service (« Moody’s ») has today assigned B1/Not Prime local currency long-term and short-term deposit ratings and B3/Not Prime foreign currency long-term and short-term deposit ratings to Stanbic Bank Uganda Limited (Stanbic Uganda). Stanbic Uganda’s B3 foreign currency deposit rating is constrained by Uganda’s foreign currency deposit rating ceiling of B3.
Moody’s also assigned a counterparty risk assessment of Ba3(cr)/Not Prime(cr) and a counterparty risk rating of Ba3/Not Prime. The outlook assigned to the deposit ratings is stable.
The Local Currency Deposit rating of B1 assigned to Stanbic Bank Uganda Limited (Stanbic Uganda) is a notch above Uganda’s sovereign issuer rating of B2, stable, and captures both the standalone strength of the bank and our assessment of its ultimate parent, South Africa’s Standard Bank Group Limited (SBG, Issuer rating of Ba1, stable), as a support provider. The Local Currency Deposit ratings incorporate 1 notch of rating uplift on top of the bank’s Baseline Credit Assessment (BCA) of b2 on account of our expectation of a ‘High’ willingness of support by SBG, in a stress scenario.
Stanbic Uganda’s BCA, its standalone credit strength, of b2 captures its (1) large domestic franchise that supports our expectation of continued resilience in its earnings generating capacity and robust capital buffers, which together will continue to provide a thick cushion to withstand potential loan losses (2) improving asset quality metrics and (3) deposit-funded balance sheet and strong liquidity profile. These strengths are moderated by (4) our expectation that the bank will increasingly rely on more confidence-sensitive non-deposit funding as it grows in size over the coming years and (5) large concentration risks in Stanbic Uganda’s loan portfolio.