United Bank for Africa (UBA)’s 2017 financial result recently has positioned the bank as having the ability to show resilience in the face of challenges. Despite the conservative approach of banks to lending last year, UBA in 2017 increased credit to its customers. Loans and advances to customers had grown by 9.6 per cent from N1.505 trillion in 2016 to N1.65 trillion as at the end of the 2017 financial year.
This gave a boost to asset base of the bank that rose from N3.504 trillion to N4.069 trillion. Its deposit base which was N2.485 trillion in 2016 had grown by 9.97 per cent in 2017 to N2.733 trillion as its liabilities grew by 15.8 per cent UBA’s profit and loss account showed positive trends in the performance amd growth in the contribution and market share from its pan-African subsidiaries was significant.
The pan-African financial institution which has roots in 19 African countries and three global financial centres outside the continent pulled a gross earnings of N462 billion, indicating a growth of 20 per cent compared with N314 billion recorded in 2016. Its interest income rose from 23.3 per cent to N325.66 billion at the end of the 2017 financial year, up from N263.97 billion recorded in 2016, while net interest income improved by 25.6 per cent to N207.63 billion from N165.2 billion in 2016. Loan impairment charges also rose by 18.8 per cent from N27.6 billion to N32.9 billion, bringing the net interest after impairment charges to N174.74 billion, from N137.5 billion in 2016. Net operating income increased by 20.8 per cent from N257.2 billion to N310.84 billion.
UBA ended the year with profit before tax (PBT) of N105.26 billion, indicating a growth of 16.1 per cent, while profit after tax (PAT) stood at N78.59 billion, showing an increase of 8.7 per cent from N72.26 billion in 2016. Based on this, the Board of UBA Plc proposed a final dividend of 65 kobo per every share of 50 kobo each. This final dividend proposal is in addition to the 20 kobo per share interim dividend paid after the audit of the 2017 half year financial statements, thus putting the total dividend for 2017 financial year at 85 kobo per share. According to the bank, the inspiring result was driven by the strong performance of its recurring core revenue lines, thus reflecting the increasing success of the its enhanced customer engagement.
UBA’s subsidiaries outside Nigeria had contributed a third of the Group’s top-line and 45 per cent of the profit for the year, a remarkable improvement from 31 per cent contribution made by the ex-Nigeria offices in 2016. This, market analysts said is the success of the bank’s expansion strategy, with target of 50 percent contributions by 2020.
Commenting on the financials, the group managing director and chief executive of UBA Plc, Kennedy Uzoka, noted that the results, underlines 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 superior long-term return to shareholders, as the economic and business environment improve.”
“In 2017, we made strong progress in our strategic initiative of dominating transaction banking across all our countries of operation, gaining market share in all lines of our business. Even as the non-oil sectors of our largest country of operation, Nigeria, remained relatively weak, we still grew earnings by 20 per cent to N462 billion, a third of which is attributable to non-funded income,” he noted. The group chief finance officer, Ugo Nwaghodoh explained that “in a period of high interest rates, we achieved a relatively low 3.7 per cent cost of funds. This operational efficiency reflects the benefit of our rich pool of stable savings and current account deposits. The net interest margin stabilised at seven per cent, even as yields on treasury assets dropped in the last quarter of 2017.
Our core transaction banking offerings gained strong momentum, with income from these business lines growing by double digits.” He said the bank remain committed to its responsible approach to balance sheet management, with focus on growing risk asset and broader balance sheet in a profitable and prudent manner. “Amidst a subdued Nigerian credit market, we grew our loan portfolio by 10 per cent, leveraging our robust liquidity and capitalisation to support good businesses through this challenging economic cycle. We closed the year with a Basel II capital adequacy ratio of 19 per cent and a liquidity ratio of 50 per cent, well ahead of 15 per cent and 30 per cent regulatory requirement respectively. Our disciplined approach to lending and broader risk management continues to uphold our asset quality.”