UBN FY 2020: Focus On Nigerian Business Yields Early Benefits

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…Topline Shrinks Despite Significant Revaluation Gains

UBN’s topline slightly decreased by 3.75% YoY to NGN166.55bn in 2020FY on the back of a downtrend in interest income and fees. Decline in Interest income by 3.34% YoY to NGN113.16bn (vs. NGN117.07bn in 2019FY) was driven by a drop in investment securities as a result of the low-interest rate environment and decline in asset yield during the year.

Also, despite the rapid growth in the bank’s digital footprint, e-business income and account maintenance fees dragged fees and commission income down by 4.61% YoY to NGN14.27bn. Nevertheless, non-interest income increased by 3.86% YoY to NGN44.48bn supported by FX revaluation gains which grew by 368.71% to NGN3.82bn. Gains (+104.57% YoY) on disposal of fixed income securities also contributed to the growth in non-interest income.

We expect the growth in trading gains to be relatively muted this year as yields tick up while FX revaluation gains are expected to moderate as we do not envisage as much devaluation of the Naira as occurred last year. Outlook for interest income is however positive given the current uptrend in interest rates and the bank’s anticipated growth in interest-earning assets.

Divestment to Significantly Boost Bottom Line in 2021FY

Net interest margin remained weak at 4.80% as against 5.80% in 2019FY despite the decline in cost of funds by 140bps to 4.20%. Increased traction on the bank’s digital channels supported retail deposit mobilization efforts leading to a 27.61% YoY growth in deposits to NGN1.13trn, composed mostly of low-cost funding. The bank’s operating expenses, however, increased by 10.17% owing to higher regulatory charges (AMCON Surcharge), software maintenance expenses (to support digital channels and support growth in transactions), and (one-off) Covid19 donations.

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In spite of reversals of the impairment charge, the cost to income ratio (CIR) climbed 132bps to 75.42% from 74.10% in 2019FY. Loss from discontinued operations dragged profit after tax by 6.05% to NGN18.67bn (vs. NGN19.88bn in 2019FY). We note that the bank’s divestment from its UK subsidiary- in line with its strategy to focus on Nigeria- is still ongoing. We expect a moderation in OPEX growth as one-off items such as covid19 donations are not expected to recur. Furthermore, sustained growth on digital channels should continue to support a decline in cost of funds via low-cost deposits.

Our projections assume that the sale of the UK subsidiary will be concluded this year and that should significantly boost bottom line performance.

Asset Quality Maintains Solid Footing

UBN was able to grow its gross loans by 23.76% to NGN736.71bn in 2020FY despite the fragile macroeconomic environment. This combined with a decline in the non-performing loans by 15.29% YoY helped moderate NPL ratio to 4.00% (vs 5.84% in 2019FY) indicating an improvement in the asset quality. Furthermore, the proportion of Stage 2 Loans to Gross Loans also declined to 19.85% from 23.54%.

We are quite pleased with the bank’s credit risk management framework and we do not envisage any significant threats to asset quality over the near term. We however think that the bank needs to deploy more risk assets in order to meet up the minimum LDR requirement so that funds are not tied down in restricted deposits which are costly but yield no interests. Effective CRR currently stands at 31.65% (against prudential guideline of 27.50%) while LDR is at 61.51%.


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We project an EPS of NGN0.88 and target P/E to 9.00x to reflect the bank’s positive outlook. This produces a Target Price of NGN7.92, with a upside potential of 49.41%. Thus, we recommend a Buy.

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UBN FY 2020: Focus On Nigerian Business Yields Early Benefits - Brand SpurUBN FY 2020: Focus On Nigerian Business Yields Early Benefits - Brand Spur

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UBN FY 2020: Focus On Nigerian Business Yields Early Benefits - Brand SpurUBN FY 2020: Focus On Nigerian Business Yields Early Benefits - Brand Spur

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Exceptional Attack Protection Proven in Rigorous MITRE Engenuity ATT&CK® Evaluations

Trend Micro’s flagship threat detection and response platform proves its advantages in sophisticated simulations


HONG KONG SAR - Media OutReach - 21 April 2021 - Trend Micro Incorporated (TYO: 4704; TSE: 4704), a global cybersecurity leader, excelled in the latest ATT&CK Evaluation performed by MITRE Engenuity. The Trend Micro Vision OneTM platform quickly detected 96% of attack steps from the simulation that mimicked the behavior of two infamous APT groups.

Unlike other industry organizations that test a product's ability to detect and prevent various malware samples, MITRE Engenuity's ATT&CK Evaluations appraise a solutions' ability to detect targeted attacks leveraging known adversary behavior. This approach more closely mirrors real-world attacks that are most critical. MITRE Engenuity focused on techniques associated with notorious threat groups Carbanak and FIN7 in this year's simulations.

Click here to read the full MITRE Engenuity ATT&CK Evaluation for Trend Micro Vision One: https://resources.trendmicro.com/MITRE-Attack-Evaluations.html.

"Security has been about spotting the tools used in an attack: MITRE Engenuity adds the dimension of recognizing rather the patterns of an attacker, no matter when different tools are used," said Greg Young, vice president of cybersecurity for Trend Micro. "MITRE ATT&CK is, like the attacks it models, complex. Doing well on a third-party test like this is satisfying – and with 96% visibility, we did very well here – especially considering it models techniques used by two of the world's most capable threat groups. An even bigger success is helping educate organizations that ATT&CK isn't just about the test but that ATT&CK can be a part of the everyday playbook for SOCs, which is reflected in our solutions."

This year's test included two simulated breaches, one at a hotel and one at a bank, using typical APT tactics such as elevation of privileges, credential theft, lateral movement and data exfiltration.

Trend Micro Vision One recorded the following impressive results:

  • Delivered 96% of attack coverage to provide visibility of 167 out of 174 simulated steps across the evaluations. This broad visibility allows customers to have a clear picture of the attack and respond faster.
  • 100% of attacks against the Linux host were detected, capturing 14/14 attacker steps, which is especially important considering its huge increase in use by many organizations.
  • 139 pieces of telemetry were enriched by the Trend Micro Vision One platform to provide extremely effective threat visibility to better understand and investigate attacks. This is critical for SOC analysts.
  • 90% of attack simulations were prevented through automated detection and response very early on in each test. Deflecting risk early on frees up investigation resources, allowing teams to focus on the harder security problems to solve.

Trend Micro Vision One allows customers to see more and respond faster — collecting and automatically correlating telemetry across email, endpoints, servers, cloud workloads and networks to speed up detections and investigations.

Its performance against techniques used by two of the world's most formidable cybercrime enterprises proves its value in threat detection and response, and ability to optimize cyber-risk reduction for customers.

The MITRE ATT&CK framework helps industry define and standardize how to describe cyber-attack techniques — offering organizations a common and regularly updated language to triage detection and response as efficiently as possible.

This year's strong performance in MITRE Engenuity's ATT&CK Evaluation is the second in a row for Trend Micro, whose capabilities also impressed in the 2020 tests.

About Trend Micro

Trend Micro, a global cybersecurity leader, helps make the world safe for exchanging digital information. Fueled by decades of security expertise, global threat research, and continuous innovation, Trend Micro's cybersecurity platform protects hundreds of thousands of organizations and millions of individuals across clouds, networks, devices, and endpoints. As a leader in cloud and enterprise cybersecurity, the platform delivers a powerful range of advanced threat defense techniques optimized for environments like AWS, Microsoft, and Google, and central visibility for better, faster detection and response. With 7,000 employees across 65 countries, Trend Micro enables organizations to simplify and secure their connected world. www.trendmicro.com.hk

About MITRE Engenuity ATT&CK Evaluations

MITRE Engenuity ATT&CK Evaluations are paid for by vendors and are intended to help vendors and end-users better understand their product's capabilities in relation to MITRE's publicly accessible ATT&CK® framework. MITRE developed and maintains the ATT&CK knowledge base, which is based on real world reporting of adversary tactics and techniques. ATT&CK is freely available, and is widely used by defenders in industry and government to find gaps in visibility, defensive tools, and processes as they evaluate and select options to improve their network defense. MITRE Engenuity makes the methodology and resulting data publicly available so other organizations may benefit and conduct their own analysis and interpretation. The evaluations do not provide scores, ranks, or endorsements.

UBN FY 2020: Focus On Nigerian Business Yields Early Benefits - Brand Spur
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