United Capital announced a profit after tax of ₦1.9 billion in the first half of 2020 – a 16% increase compared with the same period last year. This was primarily driven by a 77% increase in the investment bank’s revenue from fees and commissions which amounted to ₦1.4 billion.
Total Revenue in HY 2020 soared to N4.45bn from N3.24bn in HY 2019, an increase of 14.10% was recorded in PBT while PAT grew by 15.98% YOY.
Total Assets grew by 46.03%, being well-financed by a 54.04% increase in Liabilities and a slight decline in Shareholders Fund by 7.47%. Also, the impacts of Covid-19 reduced the value of the firm’s assets by ₦474 million during the period.
HIGHLIGHTS OF THE RESULT:
Statement of Profit or Loss:
Year-on-Year Analysis (HY 2020 to HY 2019) reveals the following;
- Revenue: N4.45 billion in HY 2020, compared to N3.24 billion in HY 2019 (37% YoY Increase)
- Operating Income: N4.10 billion in HY 2020, compared to N2.82 billion in HY 2019 (45% YoY Increase)
- Operating expenses: N2.18 billion in HY 2020, compared to N1.25 billion in HY 2019 (74% YoY Increase)
- Profit Before Tax: N2.27 billion in HY 2020, compared to N1.99 billion in HY 2019 (14% YoY Increase)
- Profit After Tax: N1.91 billion in HY 2020, compared to N1.65 billion in HY 2019 (16% YoY Increase)
- Earnings Per Share: 32 Kobo. (2019: 28kobo)
While commenting on the group’s performance the Group CEO, Mr. Peter Ashade, had this to say:
“The COVID-19 pandemic has lasted than envisaged and caused greater speculations of the global recession and slower global recovery from the pandemic. The Nigerian economy has been greatly affected by the pandemic as seen in the increasing depreciation of the exchange rate, inflation rate and other economic indicators. As we stated at the release of our last quarter result, our business was not immune to these challenges; however, the Group was able to endure the challenges- Thanks to the well-articulated and diligent implementation of our plans set out last year.
With our well-articulated plans, business continuity plan in economic crisis and solid risk assessment framework we were able to deliver an increased revenue of over 37.26%, increased PBT of 14.10% and PAT increase of 15.98%. During this same period, we successfully issued our N10 billion Series 1 bond under the N30 billion Medium-Term Debt Program – The first to be issued by an investment banking firm in Nigeria – which was oversubscribed by about 24%.”
“Going into the remaining half of the year, we remain assiduously committed to delivering greater returns to our shareholders, by constantly reviewing our strategy in the light of global and domestic happenings, ensuring that we provide value to all our stakeholders from time to time.”
Discussing the result further he stressed that; “In line with our initial strategy for the 2020 business year, we shall continue to push further our market diversification and cost-optimization initiatives as well as implement phased automation of our business processes whilst upholding our commitment to ensuring a significant improvement in our value delivery to all our stakeholders.”
Statement of Financial Position:
- Total Assets: N219.73 billion, compared to N150.46 billion as at FY 2019 (46% YTD growth)
- Total Liabilities: N201.60 billion, compared to N130.88billion as at FY 2019 (54% YTD growth)
- Shareholders Fund: N18.12 billion, decreased by 7.5% YTD as at FY 2019 N19.59 billion.
Comparing HY 2020 with HY 2019, the following are worthy of note:
- Total Revenue: The total revenue of United Capital Plc surged 37.26% in HY 2020 compared to its revenue of HY 2019. This significant increase is on the back of a strong year-on-year increase of 347.65% increase in net interest margin, 85.03% increase in net trading income and 77.15% increase in fee and commission income.
- cost-to-income ratio: The cost-to-income ratio rose by 10.35 percentage points due to the sharp rise of 363.79% in impairment allowance. This increased cost is in compliance with IFRS 9 that requires some financial assets to be measured at amortized costs.
- PBT Margin: During the period under review, United Capital’s PBT margin declined by 10.35 percentage points, although PBT increased by 14.10% in the same period. The decline in PBT margin is because of the increase in operating expenses arising from a significant increase in impairment charges during the period under review due to the impact of Covid-19.
- PAT Margin: Due to the same reasons as the PBT margin, the PAT margin declined by 7.89 percentage points year-on-year on the back of the rise in operating cost due to significant increase in impairment charge during the period under review arising from Covid-19, although the PAT significantly increased by 15.98% during the same period.
- Total Assets: Total Assets appreciated by 46.03% between HY 2020 and FY 2019, significantly on account of over 242.09% increase in cash and cash equivalent holdings and 9.29% increase in trade and other receivables.
- Total Liabilities: This increased by 54.04% owing to the growth in managed funds by 95.22%, 22.56% increase in current tax liabilities and 15.96% rise in other liabilities.
- Shareholders’ Fund: The Shareholder’s wealth declined marginally by 7.47% YTD due to 6.47% decline in retained earnings and 42.28% increase in the negative other reserves.