Despite heighten macro economic challenges, United Bank for Africa (UBA) leads Tier-1 and Tier-2 banks in Liquidity Ratio (LR) and Capital Adequacy Ratio (CAR) to maintain its soundness and resilient financial system, data collected by THISDAY has shown.
Specifically, UBA in its half year (H1) ended June 30, 2022 reported 63.70 per cent LR from 47.60 per cent reported in 2021 financial year, while its CAR increased to 25.10 per cent in H1 2022 from 24.90 per cent in 2021 Financial Year.
LR is used to measure a company’s capacity to pay off its short-term financial obligations with its current assets, while CAR is used to measure how much capital a bank has available, which is reported as a percentage of a bank’s risk-weighted credit exposures.
The CAR and the LR in the banking sector remained above prudential limits at 14.1 and 42.6 per cent, respectively in June 2022, according to the Central Bank of Nigeria (CBN).
Speaking with Our correspondence on UBA’s CAR/ LR emerging as highest in the banking sector, the Vice President, Highcap Securities, Mr. David Adnori said that the statutory required LR for bank is 30 per cent, maintaining that for UBA to have a LR above Zenith, Access Holdings, among other Tier-1 banks is an interesting development in the banking sector.