Ram affirms Union Bank BBB and P3 rating

RAM Ratings Lanka has reaffirmed the long and short-term financial institution ratings of Union Bank of Colombo PLC at BBB and P3. The long-term rating carries a stable outlook.

The ratings are supported by the Group's average capitalisation but tempered by its small stature, below average asset quality and performance.

Incorporated in 1995, Union Bank is one of the smallest licensed commercial banks (LCB) in Sri Lanka, accounting for less than 1.00% LCB industry assets as at end-September 2013. The Bank acquired The Finance and Guarantee Company Limited, renamed UB Finance Company Limited (UB Finance), for Rs 600 million in November 2011.

UB Finance had faced financial strain under its previous ownership, resulting in its loan portfolio recording high delinquencies. The Bank with National Asset Management Limited (NAMAL) and UB Finance is referred to as 'the Group'.