United Bank for Africa (UBA) Plc recorded a well-rounded performance in 2017 with considerable growths in the top-line and the bottom-line. Profit before tax rose by 16 percent to N105 billion in 2017, sustaining year-on-year growth that had seen UBA as one of the best-performing stocks at the stock market.
Key extracts of the audited report and accounts of UBA for the year ended December 31, 2017, released at the weekend at the Nigerian Stock Exchange (NSE) showed that gross earnings rose by 20 percent while pre and post-tax profits grew by 16 percent and 8.8 percent respectively.
Market analysts praised what they described as the positively surprising performance of the bank.
“Given the strong set of results, we expect to see upward revisions to consensus 2018 estimated profit before tax forecast and a positive reaction from the market,” FBNQuest, the investment banking arm of FBN Holdings, stated in its first reaction to the UBA results.
“Overall, we find UBA’s performance fair, as key line items – particularly the gross earnings and profit after tax – showed time-relative improvements, and broadly in line with expectations,” Cordros Capital stated.
The report showed significant growth in the contribution and market share from UBA’s pan-African subsidiaries. Gross earnings rose to N462 billion in 2017 as against N314 billion recorded in 2016. Profit before tax increased from N90.6 billion to N105 billion while profit after tax rose from N72.3 billion in 2016 to N78.6 billion in 2017.
The bank’s subsidiaries outside Nigeria contributed a third of the group’s top-line and 45 percent of the profit for the year, a remarkable improvement from 31 percent contribution made by the ex-Nigeria offices in 2016. This, according to market analysts affirms the success of the bank’s expansion strategy, with a target of 50 percent contributions by 2020.
The bank’s operating Income grew to N326.6 billion, a 20.6 percent increase compared to N270.9 billion recorded in 2016. This, according to analysts, affirms the capacity of the group to deliver strong performance through varying economic cycles and challenging business environment.
The report also showed that the bank’s total assets peaked at N4.07 trillion in 2017, 16.1 percent increase on N3.50 trillion recorded in 2016. Net loans rose by 9.7 percent growth at N1.65 trillion, while the customer deposits grew to N2.73 trillion, representing 10 percent increase on N2.49 trillion recorded in 2016. The bank’s shareholders’ fund also increased by 18.2 percent to N529.4 billion in 2017.
The board of the bank has recommended payment of N29.1 billion as cash dividend for the 2017 business year, representing a dividend per share of 85 kobo. Shareholders will receive a final dividend per share of 65 kobo in addition to interim dividend of 20 kobo earlier paid after the first-half results.
Group Managing Director, United Bank for Africa (UBA) Plc, Mr. Kennedy Uzoka, said the results underlined the success of the bank’s strategy of expanding across Africa, diversifying revenues and capturing the broader business opportunities inherent in Africa’s growth.
“The results reinforce the sustainability of our business model and the capacity to deliver the superior long-term return to shareholders, as the economic and business environment improve,” Uzoka said.
According to him, in 2017, the bank made strong progress in its strategic initiative of dominating transaction banking across all its countries of operation, gaining market share in all lines of its business.
He noted that while the non-oil sectors of its largest country of operation, Nigeria, remained relatively weak, the group still grew earnings by 20 percent to N462 billion, a third of which is attributable to non-funded income.
Group Chief Finance Officer(GCFO), United Bank for Africa (UBA) Plc, Ugo Nwaghodoh noted that the bank, in a period of high-interest rates, achieved a relatively low 3.7 percent cost of funds, which reflects the benefit of its rich pool of stable savings and current account deposits.
“Our core transaction banking offerings gained strong momentum, with income from these business lines growing by double digits. We remain committed to our responsible approach to balance sheet management, with focus on growing risk asset and broader balance sheet in a profitable and prudent manner,” Nwaghodoh said.
According to the GCFO, amidst a subdued Nigerian credit market, the bank grew its loan portfolio by 10 percent, leveraging its robust liquidity and capitalisation to support good businesses while it closed the year with a Basel II capital adequacy ratio of 19 percent and a liquidity ratio of 50 percent, well ahead of 15 percent and 30 percent regulatory requirement respectively.