Tier-one lender United Bank for Africa (UBA) grew profit by the most since 2016 after turning the corner to record improvements in both income and non-interest income last year.
The bank made N89.09bn in profit in 2019, 13.33 percent more than it did in the year before and the fastest bottom-line growth since a 21.14 percent growth four years ago.
The expansion followed impressive growth in non-interest income by 21.3 percent to N124.42bn last year compared to a decline in 2018, while despite a challenging interest environment, UBA was able to deliver 7.9 percent growth in net interest income also coming from a decline last year.
“The year 2019 was a very remarkable one for UBA given the adverse market developments. Nonetheless, we achieved sizable growth in balance sheet and earnings, even as we reposition the bank for the future,” said Kennedy Uzoka, GMD/CEO, UBA.
Net interest income growth was propelled by a 7.8 percent and 13.9 percent growth in interest income from corporate loans and investment securities respectively, as well as a 4.0 percent cost of funds driven by UBA’s stable retail deposits, the bank said, noting improvements in its cost efficiency.
UBA’s Cost-to-income ratio declined to 62.7 percent compared to 64 percent in 2018.
Notably, gross earnings of the lender crossed the half-a-trillion naira mark to N559bn, while total assets also crossed the N5trn mark for the first time to hit N5.6trn.
Operating income rose by 12.4 percent to N346.29bn while operating expenses rose 10 percent to N217.17bn.
Following CBN’s mandate for increased lending by banks in the country, UBA’s impairment charges rose 303 percent to N18.252bn.
UBA’s gross loan and advances rose almost 20 percent to N2.15trn while customer deposits rose 14.4 percent to N3.83bn.
The Group recorded a 0.8 percent cost-of-risk reflecting our strict credit and underwriting standards, which has helped to keep Group NPL at 5.3 percent and 2.5 percent for the parent bank, said Ugo Nwaghodoh, UBA Group CFO.
“As we will continue to pursue a cautious loan growth strategy in 2020, we have strategically maintained strong capital adequacy and liquidity ratios at 23.4 percent and 43.9 percent respectively, ensuring sufficient headroom for growth,” Nwaghodoh said.
The 2019 profit of N89.1billion, translates to 16.2 percent return on average equity (RoAE) compared to the previous year’s 15.2 percent.
A high ROAE means UBA is creating more income for each naira of shareholders’ equity.
However the UBA’s efficiency in generating income from asset dipped slightly as Return on Average Asset (ROAA) dropped to 1.7 percent compared to 1.8 percent in 2018.
The Bank has proposed a final dividend of 80 kobo for every 50 kobo ordinary share, bringing the total dividend for the financial year ended December 31, 2019 to N1.00.
According to information on Bloomberg, dividend yield for the bank shares, priced at N6.7 per unit as of Friday, stands at 12.69 percent.
This is based on the 20 kobo interim dividend last reported.
