Investors in United Bank for Africa Plc bonds have seen significant returns on investment as analysts expect the Nigerian lender continues its earnings winning streak.
At the price of Eurobond closed to premium to pair at $102.7, translating to a notable gain for the bond holders.
The strong gain in the equity and debt of the bank is an apparent evidence of global investors’ confidence in the management and overall leadership of UBA Plc, according to a statement from the lender.
“Moreso, it reflects the confidence that investors have in the prospect of the bank, particularly its ability to deliver sustainable and superior returns to both equity and debt investors,” said the bank.
S&P Global Ratings affirmed its long- and short-term global scale issuer credit ratings UBA at ‘B/B’ outlook is stable.
The rating agency said it believed the Nigerian lender will continue to maintain sound earnings and asset quality over the next 12 months, despite the sluggish economy in Nigeria and the high economic risk in other parts of Africa where the group operates.
“The affirmation reflects our view that the group will maintain its top-tier competitive position in the Nigerian banking sector. UBA benefits from a good franchise in the corporate and retail segments in Nigeria and increasing geographic diversification”, said the S and P Global Ratings Agency report.
“Overall, we think the group has an adequate business position. Furthermore, we believe that the group will display relatively stable asset quality and good earnings generation over the next 12 months,” said the report.
UBA posted third-quarter earnings that beat analysts’ estimates, fuelled by improved yield on loan book and money market instruments.
For the first nine months through September 2017, UBA’s net income spiked by 23.04 percent to N60.92 billion, ahead of the N54 billion estimates of 8 analysts surveyed by BusinessDay.
Interest income surged by 30.11 percent to N238.82 billion in the period under review, from N182.98 billion as at September 2016.
The Nigerian lender’s share price closed at N11.24 as of 2:00 pm on Friday while market capitalization stood at N376.40 billion.
As a result of improved earnings, net interest margins moved to 7.30 percent in the period under review, from 6.70 percent as at December 2016.
Analysis of UBA’s third quarter results showed that interest income from loans and advances and term bonds was up 48.71 percent to N113.20 billion, while treasury bills (under investment securities) surged by 114.36 percent to N47.19 billion.
UBA’s non-interest income increased by 18.83 percent to N84.60 billion, thanks to 81.15 percent surge in fixed income trading securities to N28.94 billion as the lender continues to make a giant stride in the electronic trading space.
