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United Bank for Africa (UBA) Plc has been growing earnings over the last 5 years, leveraging on scale and scope of operations as well as geographic diversification.
The Pan-African Bank, with operations across 19 key African markets, London, New York and Paris, posted net income of N78.59 billion to end 2017 financial year, the highest since 2013 when it recorded a profit of N46.60 billion.
Profit increased by 8.76 percent to N78.50 billion in December 2017 as against N72.26 billion the previous year, thanks to contributions from interest income and noninterest income.
Gross earnings increased by 20.30 percent to N461.55 billion in December 2017 as against N383.64 billion the previous year. There has been steady growth in gross earnings in the last five years. See Chart.
Interest income, which contributed 70.46 percent of gross earnings, grew 23.36 percent, driven by better pricing and asset allocation as well as contributions from interest income on loans and advances.
A breakdown of interest income shows term loans spiked 23.36 percent to N159.21 billion while interest income from treasury bills were up 47.94 percent to N67.15 billion in the period under review.
Noninterest income was up 12.53 percent to N118.93 billion in December 2017 from N105.68 billion as at December 2016; driven by contributions from fees and commission income and trading income.
UBA is benefiting from an improving economy as progress in unpaid loans, higher interest income from holding government debt, and a rise in profit has helped the lender bolster its capital buffers.
UBA closed the year with a Basel II capital adequacy ratio of 19 percent and a liquidity ratio of 50 percent, well ahead of 15 percent and 30 percent.
The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017.
An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the lender.
In the face of currency devaluation and cost of doing business maintained a cost to income (CIR) of 58 percent to end 2017 financial year. Operating expenses increased by 23.67 percent to N188.61 billion in the period under review.
The Nigerian lender’s loans and advances to customers increased by 9.82 percent to N1.67 trillion in the period under review as it continues to leverage on its robust liquidity and capitalization to support good businesses through this challenging economic cycle.
Serving over 14 million customers, through one of the most diverse channels in Africa, UBA’s total assets has hit N4.06 trillion, a 16 percent increase from the N3.50 trillion recorded last year.
UBA shares have gained 11.65 percent, outperforming the NSE ASI of 8.44 percent. It has market capitalization of N393.28 billion and shareholders fund of N529.43 billion.
BALA AUGIE
