United Bank for Africa (UBA) has announced an interim dividend of 25 kobo per share for the first half of 2025, a payout that has sparked interest across the market given the group’s performance.
The total dividend amounts to N10.26 billion, representing a dividend payout ratio of approximately 3 percent for H1 2025. This payout comes despite the group posting a robust net income of N335.5 billion. However, when compared to the N68.4 billion interim dividend distributed in the first half of 2024, the latest figure reflects a staggering 85 per cent decline, a development that is raising eyebrows among shareholders and market watchers.
In terms of earnings, UBA’s net income in H1 2025 showed a modest but steady improvement, rising by 6 percent year-on-year from N316.4 billion in the same period of 2024. This growth was supported largely bya 15 percent year-on-year increase in net interest income, which climbed to N773 billion from N674.6 billion in H1 2024.
Interestingly, the bank achieved this growth while reducing its impairment charges, though it continues to carry significant forbearance exposures. The group’s impairment charges for the period fell by 40 percent, down to N35.2 billion from N58.6 billion in the previous year, signalling both cautious lending practices and improved credit quality.
With these dynamics in play, UBA’s net interest income after impairment charges rose by 21 percent to N741.1 billion, compared to N614.4 billion in the first half of 2024. This suggests that the group’s core operations are delivering stronger returns despite the more cautious approach to risk.
Marginal growth in UBA’s loan book
On the balance sheet side, the group recorded a 10 percent increase in total assets during the half year, reaching N33.3 trillion compared to N30.3 trillion at the start of 2025. However, the loan book expanded by only 3 percent, moving from N7.5 trillion at the beginning of the year to N7.7 trillion. This very modest growth reflects UBA’s deliberate effort to curb non-performing loans. It comes in response to the Central Bank of Nigeria’s recent withdrawal of regulatory forbearance, which had previously allowed more flexibility in classifying risky assets.
At the end of the first half of 2025, UBA’s free cash flow was estimated at around N1.63 trillion. Against this backdrop, the bank’s decision to return only 0.6 percent of its free cash flow to shareholders through dividends is quite conservative. For a group with such financial muscle, this restrained payout strategy is quite unexpected.
Some analysts worry that the move could exert downward pressure on the share price, particularly at a time when the bank is in the middle of a rights issue. With the interim dividend translating to a yield of just 0.5 percent, existing shareholders may feel insufficiently motivated to subscribe for additionalshares. The rights issue price of N50.00 is already a challenge. It carries a 6 percent premium to the current market price of N47.
